China Q1 GDP growth slows to 10.6% yr/yr

The pace of Chinese growth eased only modestly in the first quarter to 10.6 percent, showing the resilience of the world's fourth-largest economy despite fierce winter weather and a global credit crunch.  Annual gross domestic product growth dropped from 11.2 percent in the final quarter of 2007 but easily beat market expectations of 10 percent.

With consumer inflation remaining elevated at 8.3 percent in the year to March, albeit down from near 12-year highs of 8.7 percent in February, economists said Beijing would be wary of relaxing policy despite fears for China's export prospects.

The stronger-than-expected GDP data will be welcome to global policy makers, who are looking to big emerging markets like China to take up some of the slack in the global economy as the United States teeters on the brink of recession.  China has grown by 10 percent a year or more since 2003, catapulting it into fourth place in the global economic rankings.

Economists expect it to leapfrog third-placed Germany this year, yet annual output per head of the 1.3 billion population is only about $2,500 compared with about $46,000 in the United States, Standard Chartered Bank noted in a report.  Growth beat forecasts despite what the National Bureau of Statistics called unprecedented ice storms in January and February that disrupted output across much of southern China and despite the spreading impact of the U.S. subprime credit crisis.

Although the economy has held up well so far, economists said it would be difficult for China to avoid being dragged down by weakness in the industrial world because its growth relies heavily on external demand.  Figures from the statistics office showed that Chinese inflation remains largely confined to food, which cost 21 percent more in the first quarter than a year earlier.  Consumer prices were up 8.0 percent in the first quarter from a year earlier; excluding food, they were up just 1.2 percent.