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.
“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.
This article was written by Justin McCurry in Tokyo and agencies, for theguardian.com on Tuesday 19th January 2016 08.20 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010