China's economy slowed in the first quarter of the year but inflation lingered at 12-year highs as food prices continued to soar, the government said today.
The world's fourth-largest economy grew at an annual rate of 10.6% in the first three months of 2008 from a year earlier, the National Bureau of Statistics said in a much-anticipated press conference in Beijing.
'Amid the impact of the spreading and growing US sub-prime crisis, policies were put into place in an effective way leading to a steady and fast economic growth,' the bureau's spokesman said.
China's economy showed 11.7% growth in the first quarter of last year, and 11.9% for all of 2007, according to data from the bureau.
The consumer price index, the main inflation gauge, rose 8% in the first quarter of 2008 from a year earlier after a slight easing of inflation in March, according to the bureau. Inflation was 8.3% in March, it said. In February, it had reached 8.7%, the highest since mid-1996.
The Chinese government is extremely sensitive to inflation figures, fearing that excessive price rises could trigger discontent cross the nation and heighten the risk of social unrest.
Underlining this danger, the government said food prices, of particular concern to society's poorest, were up by a steep 21% in the first quarter.
Experts say the government is struggling to find ways to rein in inflation without at the same time causing too much of a dent in economic growth.
Meanwhile, Chinese retail sales rose 20.6% in the first quarter from a year earlier, according to the bureau. The growth was 5.7 percentage points higher than the same time last year, it said. This is likely to reflect the high inflation level, as retail sales are in nominal terms.
