China’s growth slowed sharply last year, adding to the troubling economic picture that is unsettling investors around the world.
The Chinese economy grew at a 6.8 percent pace in the fourth quarter, according to data released yesterday. It was the lowest quarterly expansion since the global financial crisis in 2009.
Uncertainty about the Chinese economy — and whether the government can manage a slowdown — has been weighing heavily on global markets in recent weeks. Investors, in part, are trying to determine if China’s slump would spread, dragging down the rest of the world.
The latest data are not likely to reassure investors that all is well in China, the world’s second largest economy.
The quarterly growth rate was lower than analysts expected. For the full year, China expanded at 6.9 percent, just below the government’s target of 7 percent. The figure represented China’s slowest expansion since 1990, when foreign investment shriveled in the year after the government’s deadly crackdown on protesters in Tiananmen Square.
“Signs of growth bottoming out are nowhere to be seen,” said Li-Gang Liu (劉力剛), the chief economist for greater China at the Australia and New Zealand Banking Groups. “Instead, we will see at least another two years of further growth slowdown.”
China’s growth is decelerating as its traditional industrial businesses struggle with excess capacity and dwindling demand. A slump in new housing construction is hurting consumption of building materials including steel, cement and glass, even as home prices show signs of a rebound.
China’s export base in lower-end manufacturing, once a powerhouse that drove growth and created jobs, has been hollowed out.
Although consumer spending and more innovative private sector companies are expected to help China’s economy expand in the future, analysts worry that their development will be too slow to offset the current and painful industrial slowdown.
Taken collectively, China’s stumbles could spell more trouble for global growth, even as the economy in the US shows resilience.
Separate monthly data offered no sign that China’s slowdown was bottoming out.
Last month, industrial production rose 5.9 percent from a year ago, retail sales increased 11.1 percent and investment rose 10 percent — all of which were slightly below economists’ forecasts.
In a news release, China’s state statistics agency said the growth rate last year was challenged by a “complicated international environment and increasing downward pressure on the economy.”
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