China’s economy slows in first quarter 2014

Compared to Q1 of 2013, Q1 results of China's economy in 2014 indicates a marked slowdown.

China economy

China’s economic situation for first quarter 2014 was one very different in years past, growing “only” 7.4 per cent according to news reports. For a country that has experienced double-digit growth for several years this slow-down presents challenges.

A comparison to first quarter 2013 which noted economic growth at 7.7 per cent suggests the economy has indeed slowed since that period. Exports in January 2014 were strong, increasing by over 10 per cent, but February and March data showed declines. This is the first time since 2009 that exports have fallen two months in a row. While declines in February were mainly attributed to weaker demand due to the Lunar New Year holiday period, the causes of the March slump have proved more difficult to discern.

Manufacturing activity meanwhile is either contracting or slightly expanding depending on which measures one uses – HSBC or Chinese government. Regardless, manufacturing remains sluggish as much of the low-cost manufacturing has shifted to other countries such as Cambodia and Vietnam.

As the economy slows, the government continues to implement stimulus measures to keep the economy from faltering further. For example, the latest ones were enacted in early April – the Chinese government announced plans to increase spending on its railroad infrastructure and extend tax breaks for SMEs.