China
economy grows at slowest pace in 25 years, latest GDP figures show
World’s
second-largest economy posts figures that add to fears of a slowdown
that will affect financial markets across the world
Justin McCurry in
Tokyo and agencies
Tuesday 19 January
2016 04.24 GMT
China’s economy
grew at its slowest rate in a quarter of a century in 2015, data
released on Tuesday showed, increasing pressure on Beijing to address
fears of a prolonged slowdown and ease the jitters affecting global
markets.
The full-year growth
of 6.9% was only just short of government expectations of 7% but by
contrast, growth in 2014 stood at 7.3%.
The national bureau
of statistics’ bulletin showed GDP growth at 6.8% in the three
months to December, easing from 6.9% in the previous quarter – the
slowest quarterly rate since 2009, when growth slowed to 6.2%.
The slide from the
previous quarter was expected, but will add to concerns about the
health of the world’s second-biggest economy as it confronts a
range of challenges, including weak exports, high debt levels and
slowing investment.
China’s industrial
output in December rose 5.9% from a year earlier, compared with
forecasts for a 6.0% increase.
The lack of
surprises did at least offer some respite to stock and currency
markets.
MSCI’s broadest
index of Asia-Pacific shares outside Japan was up 0.2% on Tuesday
after earlier touching its lowest level since October 2011.
Australian shares added 0.8%, while Tokyo’s Nikkei dropped 0.3%. In
Shanghai, recent volatility gave way to a 0.2% rise, following a
13-month low on Monday.
The US dollar nudged
up 0.2% to 117.55 yen after slipping last week to a
four-and-a-half-month low of 116.51.
Analysts were
cautiously optimistic about the China’s fortunes following the
tumult of the past few weeks.
“I think that at
least the biggest fears about the real economy, fears that came to
the surface during the stock market rout ... I think those biggest
fears were overblown,” said Louis Kuijs, head of Asia economics at
Oxford Economics in Hong Kong.
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“We don’t see
signs of an abrupt slowdown, or something getting worse than we had
expected say six weeks ago.”
Gordon Kwan, a Hong
Kong-based analyst at Nomura Holdings, said: “China’s GDP growth
is not collapsing, even though the fourth-quarter figures are
slightly lower than expectations.”
Kwan said he
expected additional government stimulus, but added that the Chinese
economy was “in decent shape, despite the recent hype about how it
is on the verge of collapse”.
He believed the rest
of the world would take positives from Tuesday’s data. “Judging
by what’s happening in the markets now, there will be a sigh of
relief that quarterly growth was 6.8% and not, say 6%,” he said.
“But it’s early days yet – the real test will be the
first-quarter GDP figures.”
Policymakers in
Beijing have struggled to arrest the slide in China’s fortunes,
with some analysts predicting growth of about 6.5% this year even if,
as many expect, the authorities unveil fresh spending packages and
cut interest rates again.
Other industrialised
economies would find little to complain about if they enjoyed growth
figures approaching those released on Tuesday, but in the Chinese
context the data are cause for concern.
Having experienced
double-digit growth for more than a decade – during which it
replaced Japan as the world’s second-biggest economy – China is
now going through a painful period of readjustment as growth
inevitably slows.
Its structural
transformation from an economy heavily reliant on industrial exports
to a more service-oriented one was still in progress, the statistics
bureau said in a statement.
It added that China
was going through “a crucial period during which challenges need to
be overcome and problems need to be resolved and the task of
comprehensively deepening the reform is still heavy”.
China’s uncertain
handling of its transition has sent shockwaves around global markets.
Shanghai stocks have plunged to 13-month lows despite a massive
government rescue package. The central bank, meanwhile, has added to
confusion by allowing the yuan to weaken sharply, then intervening to
stop the fall.
Intervention has
done little to ease investor unrest. Despite six interest rate cuts
since November 2014, and reductions in the amount of cash that banks
must hold as reserves, high debt levels in the Chinese economy mean
the measures have had limited impact.
Analysts predicted
more instability for the global economy for the rest of the year.
“Regardless of whether Q4 growth was 6.8% or 6.9%, we do not expect
full-year GDP to change the evolving narrative about the weak state
of global demand,” analysts at PRC Macro Advisors said.
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