Latest gauge on China slowdown brings relief it wasn’t worse
Beijing — The slowdown of China’s once-sizzling economy has fueled anxiety over its impact on the rest of the world. Yet when Beijing reported Tuesday that its economy grew last year at the slowest pace in a quarter-century, the reaction seemed to be mainly relief it wasn’t worse.
Economists welcomed details in the report suggesting that the world’s second-biggest economy is making some progress in a difficult and complex transition — away from a reliance on manufacturing and investment in real estate and factories and toward dependence on services and consumer spending.
Stocks rose Tuesday in Asia and Europe. By midday, the Dow Jones industrial average was up modestly.
“Things are OK,” said Fotios Raptis, senior economist at TD Economics. “There’s not an outright collapse going on in China.”
Beijing reported that economic growth fell in 2015 for a fifth straight year — to 6.9 percent , down from 7.3 percent in 2014 and the slowest rate since 1990. For the October-December quarter, growth inched down to 6.8 percent, the weakest quarterly expansion in six years.
The deceleration is at least partially deliberate as the ruling Communist Party aims to manage the economy’s transition to a structure that will almost certainly deliver slower growth.
Tuesday’s report contained signs of progress. Services businesses accounted for a record 50.5 percent of China’s economic activity last year, the first time its share has exceeded 50 percent. Services grew 8.3 percent last year, outpacing the traditional drivers of economic growth — manufacturing and construction — which together grew 6 percent.
Overall growth was in line with private-sector forecasts and the ruling Communist Party’s official target of about 7 percent for the year.
“Official data do not point to a hard landing in the fourth quarter of 2015, but they provide little reason to stop worrying about China’s drag on the global economy, either,” said economist Bill Adams of PNC Financial Services Group in a report.
Investors were relieved that more pessimistic forecasts about fourth-quarter growth were wrong and expect Beijing to continue rolling out stimulus measures to prevent a hard landing.
Beijing has responded to ebbing growth by cutting interest rates six times since November 2014 and launching measures to help exporters and other industries. But economists note that China still relies on state-led construction spending and other investment.
Full- year 2015 growth was the lowest since sanctions imposed on Beijing after its crackdown on the Tiananmen Square pro-democracy movement caused growth to plummet to 3.8 percent in 1990.
The October- December growth figure was the slowest quarterly expansion since the global financial crisis, when growth slumped to 6.1 percent in the first quarter of 2009.