Growth slowest in 24 years, but that鈥檚 normal ...
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CHINA’S economy expanded 7.4 percent from a year earlier in 2014, the slowest pace in 24 years as the country’s growth has entered a phase of “new normal,” the National Bureau of Statistics said yesterday.
However, analysts said the fourth-quarter performance turned out to be better than expected, and they expected growth to be at a stable level in the coming months.
China’s gross domestic product amounted to 63.6 trillion yuan (US$10.4 trillion) last year, strengthening its position as the world’s second-largest economy, the bureau said.
Growth was led by the service sector, which gained 8.1 percent to 30.7 trillion yuan. Manufacturing added 7.3 percent to 27.1 trillion yuan, while agriculture rose 4.1 percent to 5.8 trillion yuan.
The economy increased 7.3 percent in the fourth and third quarters, after a rise of 7.5 percent in the second and 7.4 percent in the first.
Bureau chief Ma Jiantang said China had fulfilled the official growth target of “around 7.5 percent” against a background of challenges at home and abroad.
“We have managed to overcome the difficulties including a slow global economic recovery, faster reforms in the domestic market and our transition to the state of new normal,” Ma told reporters.
“The rate of 7.4 percent is hard earned and is within a reasonable range. The growth target also needs to be adapted to the new normal when the country is changing growth gears,” Ma said.
Last year, China was beset by problems ranging from weakness in manufacturing and trade, to financial worries over rising debt levels and falling real estate prices.
Ma said growth was accompanied by an inflation rate of 2 percent last year and stable employment.
In 2014, China created 13.22 million new jobs, surpassing the full-year target of 10 million and taking the working population to 772 million, 2.76 million more than in 2013.
Disposable income registered at 20,167 yuan, 10.1 percent higher.
Other indicators showed that industrial production increased 8.3 percent last year. Factories reported an expansion of 7.9 percent in December, up from a four-month low of 7.2 percent in November.
Fixed-asset investment grew 15.7 percent to 50.2 trillion yuan in 2014, and capital into property rose 10.5 percent.
Retail sales, a broad gauge of domestic consumption, accelerated 12 percent to 26.2 trillion yuan last year with online spending surging 49.7 percent to 2.7 trillion yuan.
Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said the figures were above market expectation, as the service sector had outperformed, house sales had recovered and with recovering housing sales and a stock market rally at the end of the year.
“The contribution from services to GDP growth was 3.8 percentage points in 2014, compared with around 3 percentage points from manufacturing, reflecting an undergoing structural change,” Zhou said.
“Looking ahead, Chinese authorities will likely tolerate a slower growth rate at around 7 percent under the framework of a new normal economy and will strike a balance among social, environmental and economic targets,” Zhou said.
Zhu Haibin, chief economist for China at JPMorgan, said the figures suggested the economy’s momentum had improved at the end of 2014.
“To a large extent, the economic slowing is expected and desirable, as it is mainly driven by the slowdown in fixed investment, especially in real estate and manufacturing investment which face oversupply problems,” Zhu said.
“The expansion in the service sector was stable, the unemployment rate remained under control, household income surpassed economic growth, and income inequality started to narrow.
“These are important features in China’s ‘new normal’ process,” Zhu added.
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