For the first time in almost 2 years, gross domestic product in China slowed to below 10% – rising by 8.9% in the fourth quarter of 2011.  Although the number is a bit of a shock – considering the double digit pace of quarters past – the new quarterly headline figure isn’t all that bad for the world’s second largest economy.  This is particularly true when considering other released data points this morning.  Beijing kept the country’s reference rate on its currency, the yuan, at a comparable low – currently quoted at 6.3180.

According to the National Statistics Bureau, annualized growth in the fourth quarter rose above market estimates of an 8.6% gain in overall national growth.  The level is far above the 8% benchmark that analysts are referring to when considering a soft landing for the Chinese economy.  Lending to the low, yet better than anticipated pace of growth, was a decline in demand for Chinese trade partners in the European Union – particularly in Germany – and softening housing purchases.  Lower housing market demand has been supported by marketwide restrictions implemented by Beijing officials in the past year  in order to control what some had deemed a housing bubble.

But, signs of solid near term growth prospects remained in additional reports by the statistics office.  According to government reports, retail sales increased in the month of December by a healthy 18.1% – bringing the annualized figure to an gain of 17.1%.  It seems that although housing demand may have waned in light of government restrictions, the rate of consumption is still increasing – a solid sign of support for the world’s second largest economy.  Industrial production also did extremely well, rising by 12.8% in the month – above estimates of a 12.3% showing.

Nonetheless, even with the economy seemingly supported in the short term, today’s figure will likely boost speculation and the probability that Beijing officials will begin to entertain the idea of further loosening on current monetary policy in order to prop up current growth rates.  The sentiment could lead to a temporary boost in risky assets – especially in commodity bloc currencies like the Australian and New Zealand dollars.