China's economic growth wanes to 25-year low in 2015

BEIJING -- China's economy cooled further in the latest quarter, dragging 2015's full-year growth to a quarter-century low and deepening a slowdown that has fueled anxiety over its impact on the global economy.

See Full Article

The world's second-largest economy grew 6.9 per cent in 2015, the government said Tuesday, down from 7.3 per cent in the previous year. For the October-December quarter, growth inched down to 6.8 per cent, the weakest quarterly expansion in six years.

China's growth has fallen steadily over the past five years as the ruling Communist Party tries to steer away from a worn-out model based on investment and trade toward self-sustaining growth driven by domestic consumption and services.

But the unexpectedly sharp decline over the past two years prompted fears of a politically dangerous spike in job losses. The slowdown has rippled around the world, crimping demand for South Korean electronics and Australian iron ore as well as Middle East oil and Brazilian soy.

The Chinese slowdown and a plunge in Shanghai stock prices have prompted concern about a further loss of support from an economy once seen as an engine of global growth. That has depressed international financial markets even as the United States and Europe show signs of improvement.

"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.

Growth was in line with private sector forecasts and the ruling Communist Party's official target of about 7 per cent for the year.

China's Shanghai Composite jumped 3.2 per cent and other Asian markets also rose. Investors were relieved that more pessimistic forecasts about fourth quarter growth were wrong and also expect Beijing to continue rolling out stimulus measures to prevent a hard landing.

Beijing responded to ebbing growth by cutting interest rates six times since November, 2014, and launched measures to help exporters and other industries. But economists note China still relies on state-led construction spending and other investment.

Full-year 2015 growth was the lowest since sanctions imposed on Beijing following its crackdown on the Tiananmen Square pro-democracy movement caused growth to plummet to 3.8 per cent in 1990.

The October-December growth figure was the slowest quarterly expansion since the global financial crisis, when growth slumped to 6.1 per cent in the first quarter of 2009.

Compared with the previous quarter, the measurement other major countries use, China's growth slowed to 1.6 per cent in the October-December period from the previous quarter's 1.8 per cent.

"The international situation remains complex," said Wang Bao'an, commissioner of the National Bureau of Statistics, as a news conference. "Restructuring and upgrading is in an uphill stage. Comprehensively deepening reform is a daunting task."

Growth in investment in factories, housing and other fixed assets, a key economic driver, weakened to 12 per cent in 2015, down 2.9 percentage points from the previous year. Retail sales growth cooled to 10.6 per cent from 2014's 12 per cent.

December exports shrank 1.4 per cent from a year earlier, well below the ruling party's target of 6 per cent trade growth. For the full year, exports were down 7.6 per cent, a blow to industries that employ millions of Chinese workers.

Forecasters see indications retail sales and other activity accelerated toward the end of 2015, suggesting Beijing's efforts to put a floor under the downturn are gaining traction.

"The growth picture remains two-sided. The real estate construction slump and weak exports continued to weigh on activity," said Louis Kuijs of Oxford Economics in a report.

"Meanwhile, though, consumption continued to expand robustly, supported by solid wage growth," said Kuijs. "The robust growth in the consumption and services nexus is key for policymakers. They need it to avoid labour market stress."

Global financial markets were rattled by a plunge in Chinese stock prices in June. Chinese stock markets have little to do with the rest of its state-dominated economy, but investors abroad took the decline as a sign the economy as weaker than thought.

A growing number of private sector analysts question the reliability of China's data, suggesting economic growth is much weaker than reported.

Julian Evans-Pritchard of Capital Economics said other measures of activity suggested economic growth in the latest quarter was 4.5 per cent, though that still would be among the world's strongest.

Spending on online commerce grew by 33.3 per cent over 2014, an encouraging sign for official efforts to nurture a consumer economy. Wang said the share of total economic activity accounted for by consumption rose to 56.4 per cent. That was up 5 percentage points from 2014.

Forecasters expect economic growth to decline further this year, with the International Monetary Fund targeting a 6.3 per cent expansion.

"We still think concerns about China's outlook are overdone and that the recent market volatility has been driven more by sentiment than by economic fundamentals," said Evans-Pritchard in a report. "The short-run outlook is improving."



Advertisements

Latest Economic News

  • Credit agency pushes feds to give it access to list of social insurance numbers

    Economic CTV News
    OTTAWA -- An international credit reporting agency is pushing the federal government to give it access to a monthly list of new social insurance numbers despite years of rejections over privacy concerns. TransUnion made the request anew earlier this year, shortly after Patty Hajdu became labour minister, to access the list that contains the range of social insurance numbers issued each month in various regions of the country. Source
  • Canadians set record with U.S. real estate shopping spree

    Economic CBC News
    New Brunswick's Joel Levesque had no idea he was helping set a record when he bought a home in Fort Myers, Fla., back in April. The 63-year-old semi-retired public affairs professional wanted a place to escape for the winter and didn't feel like waiting around for the loonie to gain ground on the greenback. Source
  • Debt got you down? Start a debt-destruction club

    Economic CBC News
    If you run, hide, or plug your ears every time the topic of money comes up, you're not alone. But as the era of ultra-low interest rates comes to an end, you need to force yourself to face your finances. Source
  • Ontario transit agency won't let Bombardier bid to operate commuter trains

    Economic CTV News
    MONTREAL -- Ontario's transit agency has decided not to appeal a court ruling favouring Bombardier but will exclude the Montreal-based company from bidding to continue operating GO Transit trains as it has done for decades. Source
  • Business groups blast Ontario labour proposals on last day of consultations

    Economic CTV News
    TORONTO -- Unions and advocacy groups made one last effort Friday to sway the Ontario government on its plan for sweeping changes to the province's labour laws, with some sounding the alarm about what they deem drastic measures and others arguing the proposal doesn't go far enough. Source
  • Marijuana companies band together to develop marketing guidelines

    Economic CTV News
    TORONTO -- Sixteen of Canada's licensed marijuana producers have enlisted the help of Advertising Standards Canada to develop guidelines on how the drug should be branded and promoted before its recreational use becomes legal next year. Source
  • Husky Energy set to repair pipeline that spilled crude into river a year ago

    Economic CTV News
    CALGARY -- Husky Energy (TSX:HSE) says it has been granted permission to repair and replace a section of pipeline that leaked 225,000 litres of crude in Saskatchewan just over a year ago. Chief executive Robert Peabody said that it will be applying lessons learned from the spill on the rebuild. Source
  • Ford says it will fight latest Takata recall

    Economic CTV News
    DETROIT -- Ford is fighting the latest expansion of the Takata air bag inflator recall. Earlier this month Takata filed documents with the U.S. government adding 2.7 million vehicles to the recall from Ford, Nissan and Mazda. Source
  • FedEx to close all Office Print and Ship Centres across Canada

    Economic CTV News
    FedEx Canada has announced that it will be closing all of its FedEx Office Print and Ship Centres, across Canada. All 24 centres, the manufacturing plant, and the head office in Toronto will close. Source
  • Car buying pushes retail sales up for third month in a row in May

    Economic CBC News
    Strong auto sector activity helped Canadian retail sales activity rise for a third straight month in May, climbing by 0.6 per cent to $48.9 billion, Statistics Canada said Friday. The monthly increase was double the consensus expectation of economists Source