China’s Economic Growth Slows to 6.7%

China’s gross domestic product expanded 6.7% year on year in the first quarter of 2016, according to the National Bureau of Statistics. GDP grew 6.8% in the previous quarter.

The January-March increase reflects a sharp drop in factory activity that offset 11% increases in consumer spending and industrial and infrastructure investments. Analysts note that China’s position as the “factory of the world” has waned as manufacturers shift production to cheaper countries in southeast Asia.

Still, industrial output rallied in March compared to January and February. But economists say government stimulus measures over the past year are losing their punch. Analysts predict last month’s uptick may dissolve by autumn.

Last month the government’s legislative session emphasized a determination to hold growth at 6.5%-7% this year. But critics say the focus on growth targets erodes needed reforms and overcapacity corrections needed to sustain growth.

Last year China’s annual growth rate for GDP slid from 7.3% in 2014 to a 25-year low of 6.9%.