China said today that its robust economy slowed slightly in the first quarter of 2011 but inflation hit a 32-month high, suggesting Beijing's efforts to rein in soaring costs are still falling short.
Gross domestic product in the world's second-largest economy expanded at an annual rate of 9.7% in the first three months of the year, the National Bureau of Statistics said, fuelling market expectations for more tightening measures.
The figure beat forecasts of 9.5% and was lower than the 9.8% growth rate posted in the final quarter of 2010.
The politically sensitive consumer price index rose 5.4% year-on-year in March - the fastest pace since July 2008 and well above the government's 2011 target of 4% - and 5% in the first quarter. Food prices surged 11% in the first quarter and housing costs rose 6.5%. Inflation hit 4.9% in February.
Premier Wen Jiabao vowed last weekend to ramp up efforts against rising costs, and an industry association on Wednesday ordered businesses not to raise prices and heed Beijing's call to stabilise costs to help tame inflation.
Chinese leaders, ever fearful of inflation's historical potential to trigger social unrest in the country of more than 1.3 billion people, have been struggling to rein in food and property costs.
Prices have remained high despite four interest rate hikes since October and numerous increases in the bank reserve requirement ratio, which effectively limits the amount of money banks can lend.
The cost of products at the factory gate also rose 7.3% year-on-year in March, up from 7.2% in February, as global commodity prices soar following the disasters in Japan and conflict in oil-rich Libya.
Investment in property development soared 34.1% to 884.6 billion yuan ($135.4 billion) in the first quarter.
Other data released yesterday showed a bigger than expected rise in new loans last month. Foreign exchange reserves soared past $3 trillion for the first time at the end of March. The world's largest stockpile has been rising as Beijing buys foreign currencies used to pay for the country's exports in order to control the value of the yuan.
Industrial output from China's millions of factories and workshops rose 14.4% year-on-year in the first quarter, while fixed asset investment, a measure of government spending on infrastructure, rose 25%. Retail sales in the first three months of the year were up 16.3%.
