China’s economic growth wanes to 25-year low in 2015

The National Bureau of Statistics says gross domestic product expanded by 6.9% year-over-year in 2015, down from the 7.3% gain reported in 2014.

On a quarterly basis, GDP advanced 1.6 percent in the three month-period to December, but slower than previous quarter’s 1.8 percent rise.

Growth in the fourth quarter came at 6.8 per cent year on year, the lowest quarterly rate since the global financial crisis, Xinhua cited the data as saying.

Though China’s stock market is not closely linked to its real economy, the government’s handling of recent stock woes has rightly raised questions about economic policy making at the highest levels.

Julian Evans-Pritchard, China economist at Capital Economics, warned against taking official GDP figures at face value but believed growth does appear to have been broadly stable last quarter. Meanwhile, real retail sales rose 11.5 percent on a year ago and sales of passenger cars to dealers were up 18.3 percent year-on-year.

December industrial production increased 5.9% vs. a year earlier, below estimates of 6% and November’s 6.2%. Indeed the news of China’s second consecutive year of slowing growth is no great surprise, with regular reports of its manufacturing industry slowing and subsequent reactions on the stock market causing chaotic scenes already this year. Any concerns over the economic health of China, which once enjoyed a double-digit growth for more than a decade, is likely to raise fears of spillover to other nations.

China has already served notice of a “new normal” of slower expansion as it seeks more sustainable growth, supported by domestic consumer spending rather than cheap exports and massive government investment.

The 2015 figure was well below the 7.3% growth recorded in 2014.

The data indicates that all of China’s fixed assets, with the exception of rural areas, have seen 10 percent growth in investment from 2014.

China’s economic growth ebbed to a 25-year low in 2015 as trade and consumer spending weakened, deepening a downturn that has fueled anxiety overseas over its impact on an uncertain global outlook. 4 per cent from a year earlier, compared with a growth of 0.7 per cent in the first 11 months.

Commodity prices have fallen worldwide as it became clear that the world’s second-largest economy would not need as much metal, minerals and lumber as it has been consuming in the past.

Factory contribution to the GDP was 10 per cent lower than services as the Chinese government tried to shift from investment powered growth to innovation led expansion.

‘[We think] concerns about China’s outlook are overdone and that the recent market volatility has been driven more by sentiment than by economic fundamentals, ‘ he said.