HONG KONG (CNNMoney)
Gross domestic product grew 7.7% over the previous year during first quarter, the National Bureau of Statistics reported Monday. That's slightly faster than the government's target of 7.5%, but well below the 8% expected by economists.
Separate reports on industrial production and retail sales also disappointed. Markets around Asia reacted negatively to the news, with most indices falling around 1%.
China has averaged growth of around 10% a year in the past three decades, propelling it up the list of biggest economies, generating wealth for its growing middle class and boosting global trade.
Inflation, a problem in 2012, has been tame so far this year. But economists are worried about a rapid expansion in credit and a red-hot housing market.
Earlier this month, the Fitch ratings agency warned over excessive debt levels in China and issued a rare local currency downgrade.
Credit in China has expanded quickly in the wake of the global financial crisis, with much of it issued to local governments and used to finance infrastructure projects.
But local government finances in China are notoriously opaque, and financial partnerships with local businesses are particularly murky. Fitch believes local government debt levels are now so high that Beijing will, at some point, be forced to assume some of the burden.
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The housing market is also heating up, leading some analysts to worry about the development -- and possible deflation -- of a housing bubble.
China's central government is already stepping up efforts to cool prices, and Beijing has directed local governments to institute control measures of their own.
Several cities, including Beijing and Shanghai, have responded by announcing higher taxes and fresh restrictions on property purchases. But the effectiveness of these measures is not yet clear.
China's new leadership -- which took the reins in November last year -- is looking to rebalance the country's economy, placing greater emphasis on consumption and reducing the country's reliance on investment in infrastructure, manufacturing and real estate.
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A gradual recovery would create a favorable backdrop for new President Xi Jinping and Premier Li Keqiang to pursue further reforms of China's economy.
Some experts believe growth could tail off further in the second half of this year, pointing to the possibility of rising real estate prices and inflation that could prompt a tightening of monetary policy. 
First Published: April 14, 2013: 10:32 PM ET
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