China’s economy slows to 3-year low

The pace of growth of China's booming economy weakened in the first three months of this year to its slowest in three years as export demand slackened and property market weakened.

The country's GDP grew 8.1 per cent during the first quarter, according to China's National Bureau of Statistics, which was down from 8.9 per cent growth in the fourth quarter last year and undershooting analysts' expectations.

The figure could shoo investors and as fears grow of a potential hard landing for the world's second-largest economy following years of unsustainably high growth. The country's economic growth has been weakening every quarter since the last three months of 2010.

According to economists, the slowdown could spiral out of control depending on the severity the European debt crisis assumes and the  results of the central government's two-year campaign to deflate the nation's property bubble.

Signs of a nationwide slowdown are plenty, as nervous policy makers prepare to make a decision on whether the economy requires more monetary easing. A higher-than-expected jump in inflation last month has only made their task harder. Meanwhile, China in the past year focused largely on tempering soaring consumer prices.

Unexpectedly high bank lending last month suggested the government was already uneasy about the trajectory of economic growth. New credit in March stood at a 14-month high of $160 billion. According to analysts, China's economy depended a great deal on how much its state-controlled banks lent each month, given it does not have access to the same scope of market-based financing available in more developed countries such as the US.