China’s economy slows down
CHINA’S economy slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the Communist leadership grapples with a transition to consumer-led expansion.
Industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product (GDP) rose 6.8 percent in the fourth quarter from a year earlier. Full-year growth of 6.9 percent, the least since 1990, was in line with the government’s target of about 7 percent.
Policymakers must weigh the need for further monetary easing with the risk it will spur more weakness in the yuan and additional capital outflows. Arguing against major stimulus: a rise in services, which became the biggest component of the economy for the first time, cushioned the slowdown and underpinned employment.
Kenneth Courtis, a former Asia vice-chairman at Goldman Sachs and the chairman of Starfort Holdings, said this year “will be another challenging year as the old capital intensive, highly levered industrial sector continues to be placed under severe strain”.
“But we remain constructive on the outlook for the period ahead,” he said, citing steady job gains and retail sales that were rising faster than GDP.
Industrial production posted one of the weakest gains in the past quarter century, increasing 5.9 percent in December from a year earlier, compared with a 6 percent median estimate of analysts and November’s 6.2 percent.
Retail sales increased 11.1 percent from a year earlier, compared with the 11.3 percent projected by economists. Fixedasset investment excluding rural areas expanded 10 percent last year, the slowest pace since 2000.
The Shanghai composite index closed 3.2 percent higher as the data fuelled speculation of increased stimulus and industrial shares rallied on prospects of state-fund buying.