China’s economy grew at the slowest rate since the end of the 1980s in 2015 with a 6.9% growth rate for a year ago, a drop of 0.4% from the previous 12 months.
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China’s economy grew 6.8 per cent in the fourth quarter of 2015 from the same period past year, official data showed Tuesday.
While official figures should not be taken at face value, he said, the data “don’t suggest that China is now entering a deeper economic crisis” and his group expects China’s results “to gradually turn more upbeat over the next few months”.
Full-year 2015 growth was the lowest since sanctions imposed on Beijing following its crackdown on the Tiananmen Square pro-democracy movement caused growth to plummet to 3.8 per cent in 1990.
The relatively stable rate of GDP growth looks to have been supported by the non-financial service sector, as industrial growth has been largely flat while financial sector growth fell significantly from third quarter, says a research report by Nomura. And, economists said, the tools the government traditionally used to revive growth-infrastructure spending, easy credit and ramped-up exports-appear increasingly ineffective. Economists had expected 6.9%.
The Chinese economy expanded at the slowest pace in 25 years as the nation strives to shift its focus to domestic consumption and away from exports.
With nominal GDP growth in services exceeding that in the secondary sector by an unprecedented margin, the share of the tertiary sector in overall GDP rose a whopping 2.5 percentage points to 50.5 percent in 2015.
In the recent past years China has been the growth engine for the global economy.
Beijing responded to ebbing growth by cutting interest rates six times since November, 2014, and launched measures to help exporters and other industries.
On Monday, Chinese President Xi Jinping said the country’s long-term economic fundamentals remain sound, despite downward growth pressure and recent volatility in the country’s financial markets, according to state media Xinhua News Agency.
“I predict next year’s growth will be as low as 6.5 percent”, said He Xiaoyu, professor at the Central University of Finance and Economics in Beijing.
As mentioned above fixed assets investment rose 10% past year and while still high it is nonetheless trending down fast from 15.7% in 2014, 19.6% in 2013 and a cyclical peak of 30.5% in 2009 when the government injected vast quantities of stimulus into the economy.
A slowdown in property investment will continue to be a drag on the world’s second-largest economy, despite warming home prices.
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“The continued stability of the official GDP figures will do little to assuage concerns over their credibility”, wrote Julian Evans-Pritchard, China economist for Capital Economics.
