Chinese economy posts lowest growth rate since 1990
BEIJING — China's economy last year slumped to its lowest rate of growth in 24 years, the government announced Tuesday.
China's gross domestic product grew 7.3% in the last quarter of 2014, and 7.4% over the whole year, the slowest rate since 1990 and below the official target of 7.5%.
Similar growth levels would gladden hearts in most countries worldwide, but the figures represent a continuing slowdown for the world's second biggest economy, where double-digit expansion over the past three decades followed China's switch from Marxist to market methods.
After years of breakneck growth, Chinese leaders including President Xi Jinping and Premier Li Keqiang now emphasize a "new normal" of slower but better quality economic growth. Beijing aims to overhaul the economy by boosting domestic consumption and reducing its reliance on both government investment and state-owned heavy industry.
Li, who speaks Wednesday at the World Economic Forum meeting in Davos, Switzerland, is likely to explain these revised goals in a bid to reassure other leaders that China will continue to drive global growth.
"Generally speaking, China's economy has achieved stable progress with improved quality under the new normal in 2014," Ma Jiantang, head of the National Bureau of Statistics, told a news conference Tuesday. He also warned about the "complicated" domestic and international situations, and said development faces "difficulties and challenges."
The International Monetary Fund (IMF) lowered its forecasts Tuesday for Chinese growth in each of the next two years, predicting GDP of 6.8% in 2015, down from its earlier forecast of 7.1%, and 6.3% in 2016, down from 6.8%. At the same time, the slowdown reflects a welcome decision by the government to re-balance the economy, said the IMF chief economist Olivier Blanchard, Reuters reported.
Economist Han Meng, a researcher at the Institute of Economics of the Chinese Academy of Social Sciences, an official think-tank, also welcomed slower growth as the new normal.
"We can't judge the economic situation just by the GDP figure, we should also consider whether there is new structural adjustment and transition of the economy, 'green' GDP, and so on," Han said. "Quality is the most important thing, and it's important that people's living standard has been raised."
Amid the barrage of stats released Tuesday — including 28.9 million tons of poultry eggs in 2014, up 0.6% — the report showed China had 1.37 billion people by year end, up 0.52% on 2013, and almost 55% were urban residents, reflecting a dramatic shift in recent years from a majority rural society. Per capita disposable income for urban residents rose 6.2% in 2014, lower than overall economic growth, while it grew 9.2% for rural residents.
China's GDP figures have long attracted doubts over accuracy, given the immense pressure on local government officials to present strong results. The government is expected to announce the 2015 GDP target in March, when it holds the annual session of China's rubber-stamp legislature. Key economic challenges include falling property prices and industrial over-capacity.
The government will continue to promote growth in consumption and services, to raise the overall quality of growth and reduce reliance on investment, said economist Ines Lam, a Hong Kong-based economist at CLSA, an investment bank, who predicts 7.1-7.2% GDP in 2015. But Beijing will also deploy "traditional policy tools," such as large-scale infrastructure projects "to maintain growth at a politically acceptable level," Lam wrote Tuesday.
Jian Chang and Zhou Yingke, analysts at Barclays Capital in Hong Kong, forecast 7% growth in 2015. Falling oil prices will reduce China's import bills, but the government "will likely use the opportunity to reduce monetary easing and implement fiscal consolidation as elevated debt levels and large excess capacity remain the top challenges for the medium-term sustainability of the economy," they wrote Tuesday.
Contributing: Sunny Yang