China’s economy registered 7.4 per cent growth in the first quarter of the year — a figure that most emerging economies would perhaps deem robust, but the slowest growth in China over the past five quarters, underlining renewed concerns here over falling investment, a cooling real estate market and a slump in foreign trade. Growth in the first three months fell from 7.7 per cent in the last quarter of 2013.

Chinese officials said the figures reflected the economy entering a new period of lower growth where the focus would be on structural adjustment — away from investment-driven growth to boosting domestic demand and high technology industries — rather than on achieving double-digit growth rates.

“After high speed double-digit growth rate of over 30 years, we have now entered a new stage of transformation and transition,” said Sheng Laiyun, Director-General at the National Bureau of Statistics. “This is still around our set target of 7.5 per cent so it is within our expected range,” he said. “If you look at the world, a growth rate of 7.4 per cent is still a high speed growth rate.”

Nevertheless, the slowing down economy has concerned analysts, with growth this year, if below 7.6 per cent, likely to be the slowest since 1990. Growth has continued to decline since 2010, when the economy grew 10.4 per cent propelled by a massive $586 billion stimulus plan put in place after the financial crisis by a leadership worried about job losses.

A subsequent surge in fixed asset investment has, however, worsened imbalances, and created bubbles in sectors such as real estate and steel — where a boom also helped fuel record imports of ores from countries like India — prompting the government to put in place a rebalancing plan. “This is like driving a car uphill,” Mr. Sheng said, “If you slow down, it is a bit easier to drive more steadily. We are now in a crucial period of shifting gear.”

Yet, the government has found it hard to hit the brakes: this quarter, despite the overcapacity fears, fixed asset investment grew 17.6 per cent, although 3.3 percentage points lower than last year. Investment in real estate grew 16.8 per cent. However, sales of commercial buildings and residential buildings were down by 5.2 per cent and 7.7 per cent, respectively.

Mr. Sheng said the ‘brightest spot’ was signs of readjustment. Domestic demand was making a greater contribution to growth, with retail sales up 12 per cent and consumption accounting for 65 per cent of GDP, he said.

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