• Mainland China's real GDP growth slowed to 6.1% in the first quarter of 2009 from 6.8% in the fourth quarter of 2008 as demand from the country's major trading partners continued to worsen. Strong domestic demand was the main driving force for growth in the period.

 

• While there is no sign yet of any recovery in the external horizon, the strong credit growth of close to 30% in the first quarter and the launch of more government projects in the months ahead bode well for a rebound of economic activities on the Mainland, to about 7% in the second quarter.

 

• Consumer prices dipped by 1.2% in March after contracting 0.3% in the first two months, implying that the spectre of deflation is here to stay, at least for a while.

 

• With interest rates unlikely to fall in the near term given the record rate of credit expansion, real interest rates will remain high for some time to come, which is not conducive to the government's effort of reviving growth. Overall, the Mainland's 8% growth target for this year is still within reach, though actually achieving it remains a challenge.

Mainland China's real GDP growth slowed to 6.1% in the first quarter of 2009 from 6.8% in the fourth quarter of 2008 in the face of rapidly deteriorating external demand.

The Mainland's exports dropped 17.1% in March after falling 21.1% in the first two months as demand from the country's two biggest trading partners, the European Union and the US, plunged. Exports to the European Union contracted by 20.2% in March after sliding 22.9% in the first two months, and those to the US plummeted 12.6% following a drop of 16.1% in January-February.

Strong domestic demand provided much of the driving forces for the Mainland's economic growth in the first quarter. Fixed asset investment soared by 30.3% in March after climbing 26.5% in the first two months as the government's stimulus measures started to take effect. Retail sales of consumer goods also held up well, rising by 16.4% in March and 15.9% in the first quarter, both in real terms.

In terms of contribution, consumption accounted for 4.3 percentage points of the first quarter's GDP growth, investment two percentage points, and net exports minus 0.2 percentage point. That investment's contribution was only two percentage points was due mainly to the run down of inventory during the period, according to officials.

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