China economic growth edges down to 6.8 percent last quarter

In this photo taken Monday Jan. 18, 2016, a worker labors on the assembly line of the X5 SUV of Zotye Auto in Hangzhou in east China’s Zhejiang province.

Speaking before the release of heavily anticipated Chinese growth figures for 2015, Faber, the publisher of The Gloom, Boom & Doom Report, put the country’s growth at about 4 percent, far from the 7 percent Beijing was aiming for, or the 6.9 percent it achieved.

The message coming from the Chinese government is that the economy is in the process of transformation, which is why data for older traditional manufacturing industries are showing a decline, which services now accounts for half the economy and are expanding rapidly.

On a quarter-on-quarter basis, real GDP growth slowed to 1.6% in the fourth quarter, from 1.8% in the third quarter.

While this is still the lowest growth since 2009 in quarterly terms, the lowest annual growth since 1990 and the accuracy of the data is always doubted, markets are more cheerful and the Australian dollar is on a recovery path after leaning lower after the initial dive.

“We think that China’s economy will grow 6.3 per cent in 2016 versus consensus expectations around 6.5 per cent. While further slowdown in investment is inevitable, steadily growing consumption supported by the services industry will help reduce the “tail risk” facing the economy”. “Restructuring and upgrading is in an uphill stage”.

The deceleration is at least partially deliberate as the ruling Communist Party aims to manage the economy’s transition to a structure that will nearly certainly deliver slower growth.

Tony Nash, chief economist at the Complete Intelligence Consultancy firm, said while it was a setback for the global economy, China’s economy still grew more robustly than most countries.

Last year’s growth was well below the 7.3pc reported in 2014, and slightly below consensus forecasts.

Industrial output rose 5.9% in December from a year earlier, missing forecasts of 6.0%, and slowing from November’s 6.2%.

“The latest set of data supports a slowdown in economic activity, but also confirms its resilience”, he said in a note to clients.

China’s economic growth in the fourth quarter slowed to the weakest since the financial crisis.

Recent falls on Chinese equity markets have also created panic on global markets about the mainland’s economic strength.

When comparing numbers, many analysts consider what is happening in China “a slowdown” in its economic growth rather than a “meltdown”.

The economist believes that the official GDP figures have become a poor gauge of the economy’s performance in recent years and now overstate growth by a wide margin.

Catherine Yeung from Fidelity International was quoted by the BBC providing the following analysis, “The health of the labour market, retail sales and industrial production data are all key indicators for growth”.

Julian Evans-Pritchard, China economist for Capital Economics, said: “The continued stability of the official GDP figures will do little to assuage concerns over their credibility”.