China Economic Growth Slowest In 25 Years

China.jpg

China’s economy grew by 6.9 percent in 2015, compared with 7.3 percent a year earlier, marking its slowest growth in a quarter of a century.

China’s growth, seen as a driver of the global economy, is a major concern for investors around the world.

Beijing had set an official growth target of “about 7%” for the world’s second-largest economy.

Chinese Premier Li Keqiang has said weaker growth would be acceptable as long as enough new jobs were created.

But some observers say its growth is actually much weaker than official data suggests, though Beijing denies numbers are being inflated.

Analysts said any growth below 6.8 percent would likely fuel calls for further economic stimulus. Economic growth in the final quarter of 2015 edged down to 6.8 percent,
according to the country’s national bureau of statistics.

It’s said so often that it has become a financial markets cliché – when China sneezes, the rest of the world catches a cold.
The drama of China’s stock market crash over the last year has affected investor sentiment and data out today is unlikely to improve matters. But frankly, news that China is slowing down shouldn’t come as a surprise.

The government has been broadcasting this for some time now as it attempts to transition from a state-led investment and manufacturing economy to one more dependent on services and consumption. Those two aspects now make up 50.5 percent of the economy, up from 48.5 percent in 2014.

But the real concern is just how badly China’s economy is likely to do in the future, and whether these figures can be trusted at all.
Critics say China’s data is unreliable and that real growth figures may be much weaker. Recent provincial economic data has indicated that growth could be much lower than what the government says it is.

China’s headline annual economic growth numbers are important to the rest of the world – but so too are other monthly economic data as they can provide a more in-depth look at the economy and where it’s heading.

Monthly industrial production (IP) and retail sales numbers for China were also released on Tuesday, with both December numbers coming in just slightly worse than expected.
Industrial production – or factory output – expanded 5.9 percent in December, down from 6 percent in November. Retail sales grew 11.1 percent, down from 11.3 percent in November.

“[The] health of the labour market, retail sales and industrial production data are all key indicators for growth,” said Catherine Yeung from Fidelity International in a note.

“Like any economic data, it’s important to look at the themes and trends that drive them and not just the headline figure.

“When you look at China with this lens, we’re not seeing a meltdown, just a slowdown,” she added.
Others said Tuesday’s numbers were actually a relief.

“GDP was generally in line with what many, including the IMF, expected,” said economist Tony Nash.

“China’s growth in 2015 was equivalent to the size of the entire economy of Switzerland or Saudi Arabia,” he said. “That’s not an easy feat and shows the magnitude of the accomplishment,” he added.

Share News

submit to reddit