China maintained its economic growth at 7.7 percent last year — the same as that for 2012, which was the worst growth rate since 1999 — as the government yesterday warned of “deep-rooted problems,” including a mountain of local authority debt.
The growth figure matched the median forecast in a survey of 14 economists by Agence France-Presse, but exceeded the government’s growth target for the year of 7.5 percent.
Economic growth for the fourth quarter also came in at 7.7 percent, the National Bureau of Statistics said, from 7.8 percent in the previous three months.
Growth for the fourth quarter was better than the AFP survey’s median forecast of 7.6 percent.
Hong Kong-based UBS Securities economist Wang Tao (汪濤) attributed the slowdown in fourth-quarter growth to “a decrease in infrastructure investment in the past few months, due to a stronger intention by the central government to control credit issuance and local government debt.”
“Generally speaking China’s economy showed good momentum of stable and moderate growth in 2013, which is [a] hard-earned achievement,” bureau chief Ma Jiantang (馬建堂) told reporters.
The agency also reported positive data for industrial output, retail sales and fixed asset investment.
“However, we should keep in mind that the deep-rooted problems built up over time are yet to be solved in what is a critical period for China’s economy,” Ma said.
For this year, the median forecast in the AFP survey was for 7.5 percent growth.
“Judging from the data, our outlook for this year remains that China’s economy will continue slowing down in the first half,” said Wendy Chen (陳家瑤), Shanghai-based analyst for Nomura International.
Within the past decade Chinese growth was regularly in double digits, but it has been slowing and last year’s result has it in single figures for three consecutive years for the first time since 2002.
China’s GDP totaled 56.88 trillion yuan (US$9.39 trillion) last year, the bureau said. It gave the country’s Gini co-efficient — a measure of income inequality, with 0 representing perfect equality and 1 total inequality — as 0.473, a minuscule improvement on 0.474 in 2012.
Ma said China faces problems, including dealing with burgeoning local government debt.
“The risk of local government debt should be prevented and greater efforts are to be made to weed out outdated production capacity,” he said.
China’s leaders are also concerned about its financial system, including “shadow banking” and government debt, particularly at the regional level.
The results of a long-awaited debt audit last month showed local governments liabilities had ballooned to 17.9 trillion yuan as of the end of June, up 67 percent from the end of 2010.
Local authorities have long used debt to fuel growth in their regions, often by pursuing projects that are not economically viable or sustainable.
While few see the problem as a systemic threat, the debt issue is considered a serious potential drag on the economy unless steps are taken to rein it in.
Analysts also say that shadow banking — non-transparent, less regulated credit — can stoke asset bubbles and threaten stability.
The term refers to lending sometimes issued by legitimate banks and financial institutions, as well as private deals between individuals or firms, that have arisen as a way of getting around strict banking rules.