Mon, Jan 19, 2015 page15

• China growth slows to 1990 level

  • AFP, BEIJING
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  China’s annual GDP growth slowed to its weakest rate in more than two decades last year, according to an AFP survey, projecting further deceleration in the world’s second-largest economy this year.

  The median forecast in a poll of 15 economists saw the Asian giant’s GDP expanding 7.3 percent last year, down from 7.7 percent in 2013.

  That would be the worst full-year result since the 3.8 percent recorded in 1990 — the year after the Tiananmen Square crackdown.

  

  A vehicle maneuvers a container into place at the port in Lianyungang in China’s Jiangsu Province on Saturday.

  Photo: AFP

  The Chinese National Bureau of Statistics (NBS) tomorrow releases the official GDP figures for the fourth quarter and the whole of last year.

  For this year, economists see growth slowing further to a median 7 percent, as Chinese leaders proclaim a “new normal” of slower expansion and emphasize economic reforms.

  “China may introduce many restructuring and reform measures this year, and this may have some negative impact on economic growth,” ANZ economist Liu Li-Gang (劉利剛) told reporters.

  He said that they might include changes to state-owned enterprises, financial reforms such as interest rate liberalization and looser restrictions on private banks.

  China, a main driver of global growth, was beset last year by problems ranging from weakness in manufacturing and trade to financial worries over rising debt levels and falling real-estate prices, which have sent shockwaves through the key property sector.

  For the period between October and December last year, the survey saw GDP as having risen a median 7.2 percent year-on-year.

  That would be marginally weaker than the third quarter’s 7.3 percent, and the worst quarterly result since the first three months of 2009, when growth logged a 6.6 percent expansion during the global financial crisis.

  Authorities appeared to take last year’s performance largely in stride, sticking to a scenario whereby the country’s consumers take the lead in underpinning expansion in coming years, emphasizing in public statements the quality of growth rather than its size.

  “China has entered a new normal of economic growth,” Chinese Vice Minister of Foreign Affairs Li Baodong (李保東) told reporters on Friday, repeating a newly favored phrase of the country’s leaders. “That is to say, we are going through structural adjustment and the structural adjustment is progressing steadily.”

  Purveyors of high-quality goods, such as neighbors Japan and South Korea, as well as Europe and the US, could stand to benefit significantly from the remodeling of the economy.

  However, the implications of slowing Chinese growth for the rest of the world are already visible.

  Commodity exporters, such as Australia, have suffered, after profiting immensely from China’s boom years when expansion averaged 10 percent, hitting 14.2 percent as recently as 2007.

  However, there were limits to official nonchalance in Beijing, as a series of measures dubbed “mini-stimulus” by economists were put in place starting in April last year, while in November the central People’s Bank of China cut interest rates for the first time in more than two years to try to put a floor on the slowdown.

  Economists are broadly expecting further monetary policy tinkering by the government this year, but say the focus will be on structural reforms over the temptation of stimulus.

  An official expansion target of “about” 7.5 percent was set for last year.
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