China's economic growth slows further China's economy grew at its slowest pace in more than two years in the fourth quarter. Photograph by China Span Keren Su/Sunset/Rex Features Photograph: CHINA SPAN Keren SU / Sunset / R Growth in China ebbed to its lowest level for two and a half years at the end of last year, as European demand plunged and Beijing fought inflation, but the fourth quarter's 8.9% rate was still slightly above expectations. That took 2011's growth to 9.2% year-on-year, compared with 10.4% for 2010. Analysts said the new figures suggested the economy was broadly on course, given the government's long-running attempts to curb inflation and property prices. But they warned that coming months are likely to see a more significant fall in growth. Ma Jiantang, commissioner of the National Statistics Bureau, told a news conference that global woes and inflationary pressures at home meant "complexity and challenges" confronted the country. "We will face a number of risks that affect the steady growth of the Chinese economy," he said. He added that the "ideal situation" would be to maintain low inflation and growth of 8.5 to 9%. Real estate investment fell sharply in December, the National Bureau of Statistics reported, taking the annual increase to 27.9%, compared to 29.9% for the first eleven months. But growth in retail sales rebounded to 18.1% in December, from 17.1% the previous month. Growth in factory output also rose to 12.8%, from 12.4%. There's a high degree of uncertainty about what's going on in the international situation; will Europe muddle through or crumble? [Policy makers] are biding their time and as long as things look roughly okay - as these latest numbers do - they will stick with current policies," said Arthur Kroeber of Beijing-based GaveKal-Dragonomics. The numbers are pretty decent and in line with the expectations that the economy is clearly slowing, but not slowing catastrophically. Broadly, we expect spending to continue to decelerate and export numbers are going to slow a bit more, mainly because Europe is the number one export market. He said he expected growth to hit around 8% this year, slightly below the forecasts of many economists. In a note, Brian Jackson of RBC Capital Markets said it expected "further gradual moderation in growth over 2012 rather than a hard landing," predicting growth would hit 8.4%. While the last quarter saw the lowest growth since the global economic crisis of 2008 took its toll, Jackson said these circumstances were different. China's slowdown this time around is taking place at a much more gradual pace, making it less disruptive and alarming for policy-makers. Back in 2009, Beijing was forced to implement an aggressive policy stimulus in order to reverse the freefall in activity, but this time around policy-makers have more freedom to respond flexibly," he said. IHS Global Insight is predicting growth of around 7.5 to 8% with Beijing-based macroeconomist Alistair Thornton warning: "As China strides into the Year of the Dragon, its economy is in the midst of an aggressive slowdown." His note suggested the property market was the biggest factor, with tight credit conditions - although the government has recently shifted towards easing monetary policy - and European problems also playing a part. While improvements in the US appeared to have cushioned the impact of the Eurozone's crisis on Chinese industry, he warned that the export outlook was bleak. He added there was still little sign that China was boosting domestic consumption, as it has long sought to do. "Even as external imbalances appear to be resolving themselves, internally the economy is even more skewed towards investment," he wrote. Others warned that the early Chinese New Year - which falls next week - has probably boosted the last quarter's industrial data as factories usually up production because workers return home for the festival.