BEIJING— Chinese officials said economic growth for the world's second largest economy slowed in the first quarter of this year. Economists are warning that the downward trend could continue as China seeks to transform its economy with market-based reforms.
China's National Bureau of Statistics said economic growth in China during the first quarter slipped to its slowest pace in 18 months.
Bureau spokesman Sheng Laiyun said the growth rate of 7.4 percent is a reflection of China's efforts to transform its economic model. He said the figures were still within the range the government expects, and that there are already signs of progress in the government's efforts to reform the economy.
Sheng added, however, that "at the same time the complexities of the global economy continue to put downward pressure on the Chinese economy." He said that, "looking forward, persistent efforts are needed to oversee the rollout and implementation of government policies."
Some economists saw reason for optimism in the figures released Tuesday, noting that industrial production picked up in March and that retail sales were slightly better than expected for the first quarter.
Others predict the slowing of the Chinese economy will continue.
Andrew Batson of GK Dragonomics in Beijing said seasonal factors can make first quarter growth seem to be especially weak and that the economy may pick up from its current pace. But, more broadly, he says, it's likely the government will not reach its goal of 7.5 percent for this year.
"Growth is going to slow this year pretty much regardless of what the government does. If they can avoid that growth slow down turning into a negative spiral and keep spirits high in the private sector companies, then I don't think the growth slowdown is disastrous," said Baston. "But, it depends on their ability to deliver politically."
Late last year, China unveiled sweeping reforms aimed at letting the market have more sway in the economy, but some economists say their rollout is taking too long.
The changes are hoped to make the economy more efficient by opening up more sectors to competition from private and foreign enterprises.
Song Hong, an economist at the Chinese Academy of Social Sciences said China's economy still has huge potential, but government measures to address problems such as local government debt, graft and the country's red-hot property market have had a dampening effect on the economy.
Song said that, "from the time that the new government stepped into office it has taken a more cautious approach to the economy as it has taken steps to avoid the problems of the past such as corruption and inefficiencies." He said, "the government has yet to fully utilize some of the potential of the Chinese economy of more opportunities for development."
Song said that could come in the form of investment in public infrastructure projects, the loosening of credit and a wide range of restrictions including those on the purchase of homes.
The Chinese government has already announced some measures to boost growth such as investment in railway projects and tax cuts for small firms. They are also speeding up efforts to improve slum areas known as shantytowns, where tens of millions of poor Chinese live.
However, Chinese Premier Li Keqiang said China will not use any major short-term stimulus measures to fight short-term dips in the country's economic growth.