China’s growth hits 25-year low, within official target

Amid global market jitters, China has posted its weakest annual economic growth in a quarter century.

Analysts polled by Reuters had predicted gross domestic product (GDP) in the world’s second-largest economy would grow 6.8 percent in the fourth quarter, compared with 6.9 percent in the prior quarter. This is equal to a 5.8% growth in Q4 from 6.2% growth recorded in Q3 and 7.1% in Q2, in through the year terms.

The softer-than-expected output data points to continued weakness in factory activity at the end of a year in which China marked its slowest economic growth in 25 years.

That would represent China’s weakest yearly growth since 1990, and falls a hair below the government’s target of 7%.

For our part, we believe 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. The stock markets have stumbled into the new year, erasing gains from an unsteady recovery after a summertime crash.

One analyst noted that the decline in growth is likely to continue.

“The worldwide environment remains complex, domestic restructuring and upgrading are in an uphill stage, and economic reform faces a daunting task going forward”, Wang Baoan, Commissioner of the National Bureau of Statistics, told reporters, announcing the figures.

Thomson ReutersAn investor looks at an electronic board showing stock information at a brokerage house in ShanghaiSHANGHAI (Reuters) – Chinese markets are on tenterhooks Tuesday as investors worldwide brace for data expected to confirm the Asian giant grew at the slowest pace in almost seven years last quarter.

Fixed asset investment growth also slowed from 10.2 to 10 per cent, defying forecasts for it to remain steady.

CURRENCIES: The U.S. dollar rose to 117.62 yen from 117.50 yen in the previous trading day.

Likewise, retail sales climbed 11.1 percent in December, slightly weaker than prior month’s 11.2 percent increase and the 11.3 percent rise expected by economists. “And China since the financial crisis has been the biggest contributor to global GDP growth”.

European bank shares took a hit after the European Central Bank said it would quiz euro zone lenders about high levels of bad loans. Retail sales growth cooled to 10.6 percent from 2014’s 12 percent.

But the growth data released Tuesday didn’t appear to trouble investors.

“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.

New housing starts declined 14 percent as developers were still selling off bloated inventories of unsold homes, though inventory floor area was still 15.6 percent higher than a year earlier, but down from 16.5 percent in November.