Growth on slow track for rest of year: EIU

A property project is under construction in Nanjing, capital of Jiangsu province. China's economic growth is estimated to expand by 7.3 percent this year. Dong Jinlin / For China Daily

China's economic growth will probably slow further throughout 2014, after first-quarter GDP expansion dipped to the lowest level in 18 months, researchers with the Economist Intelligence Unit said on Wednesday.

The world's second-largest economy will expand about 7.3 percent for the full year, because the government's mini-stimulus package announced in early April won't support a faster pace.

"China's GDP growth in the first quarter was slightly below our estimate but still in an acceptable range," said Liu Qian, deputy director of China services at the EIU.

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"The first quarter probably registered the fastest growth pace for this year. Growth is expected to slow to 7.1 percent in the third and fourth quarters, with the full year to see growth of 7.3 percent," Liu said, citing the group's latest forecast.

She added that China's economic growth is in a structural downtrend, with expansion likely to be less than 7 percent next year, falling to 6 percent in 2020.

The economy expanded 7.4 percent year-on-year in the first quarter, the slowest growth since the third quarter of 2012. The government has announced several measures to stimulate activity, including further railway construction and more public housing.

Urban renewal, which could generate investment of more than 1 trillion yuan ($160 billion), will provide solid support for economic growth, Liu said. "But China's GDP may not grow 7.5 percent this year without a more powerful stimulus package," she added.

"It's a good test to see whether the government will tolerate a growth rate below 7.5 percent, given that the central government targeted growth of about 7.5 percent for this year," Liu added.

Xu Sitao, chief representative of The Economist Group in China, added that the government will not roll out a large-scale stimulus package as seen in 2008.

China's leading indicators for the first two months of 2014 were disappointing. Industrial output growth decelerated to 8.6 percent on average, down from 9.7 percent in December and the slowest rate since August 2009.