The economy grew stronger than expected in the first quarter but it was accompanied by still surging consumer prices, prompting the government to tighten credit.
Growth in the world's fourth-largest economy was 10.6 percent in the first three months from a year earlier, beating market expectations of about 10 percent. But it was down from 11.2 percent in the fourth quarter last year, the National Bureau of Statistics (NBS) said yesterday.
Weakening export growth contributed to the mild slowdown, but rebounding retail sales and fixed-asset investment helped the economy expand faster than most analysts expected.
Retail sales of consumer goods rose 20.6 percent year on year to 2.56 trillion yuan ($365 billion) while fixed asset investment reached 2.18 trillion yuan ($311 billion), up 24.6 percent, or 0.9 percentage points higher than a year earlier.
The consumer price index - the key gauge of inflation - gained 8.3 percent year-on-year in March, down from a 12-year high of 8.7 percent in February. Despite earlier signs of easing, the CPI still gained a worrisome 8 percent year-on-year for the first quarter.
"The top concern is still inflation," said Li Xiaochao, spokesperson for the NBS, adding that the tight monetary policy would continue.
Shortly after Li's comments, the central bank jacked up the reserve requirement ratio for local banks, asking them to set aside more cash in deposits so as to mop up liquidity and curb inflation.