Chinese economy skirts 14-year lows as reforms stall growth
CHINA'S economy narrowly missed expectations for growth to hit 14-year lows in 2013, though some economists say a cooldown is inevitable this year as reforms are implemented.
The chance that the world's second-largest economy may decelerate in coming months was underscored yesterday by data showing growth in investment and factory output flagged in the final months of last year.
Waning momentum capped China's annual economic growth at a six-month low of 7.7pc from October-December, a slowdown analysts say may deepen this year as China revamps its growth model.
Full-year growth in 2013 was 7.7pc, steady from 2012 and just slightly above market expectations for a 7.6pc expansion, which would have been the slowest since 1999.
"It's like a Chinese medicine," said Lu Zhengwei, chief economist at Industrial Bank in Shanghai. "If you don't take it, you may have problems in future. But if you take it now, you cannot expect to regain your youth tomorrow."
After 30 years of double-digit economic growth that lifted many millions of Chinese out of poverty, but also devastated the environment, China wants to change tack by embracing sustainable and higher-quality development instead.
That means reducing government intervention to allow financial markets a bigger say in allocating resources, and promoting domestic consumption over investment and exports.
Data from the National Bureau of Statistics shows China's 56.9trillion yuan (€6.94 tn) economy is still dependent on investment for growth.
Capital formation accounted for 54 pc of China's economic growth last year, exceeding the 50pc share taken up by consumption, while net exports detracted 4.4pc from growth.
"I don't see any evidence of a rebalancing last year," said ING economist Tim Condon.
Yet there are signs Beijing wants to rein in investment.
"In 2014, I believe reforms will continue to be a key driving force for economic growth," said Ma Jiantang, head of China's statistics bureau. (Reuters)