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

  • Postmedia selling Infomart division

    Economic CBC News
    Postmedia Network Canada Corp. has signed a deal to sell Infomart, its media monitoring division, to Meltwater News Canada Inc. for $38.25 million. The cash-strapped media company says net proceeds from the sale will be used to repay debt. Source
  • A new platform for Whole Foods? How deal could upend grocery

    Economic CTV News
    NEW YORK -- Seeing Whole Foods products first in Amazon searches? Breezing through the grocer's stores with an app that scans affordable fruits and seafood? Those are among the possible scenarios that unnerved the food industry last week, when Amazon announced a $13.7 billion megadeal to acquire Whole Foods. Source
  • Foreign home buyers surge 37 per cent in Montreal on growth in Chinese purchases

    Economic CTV News
    MONTREAL -- Canada's federal housing agency says the number of foreign buyers in the Montreal area surged by 37 per cent in the first four months of the year. The 236 purchases by foreigners accounted for 1.8 per cent of all real estate transactions from January to April, the Canada Mortgage and Housing Corp. Source
  • Qatar Airways seeks 10% stake in American Airlines

    Economic CBC News
    State-owned Qatar Airways is attempting to buy 10 per cent of American Airlines, a surprising move that would trigger an antitrust review by the U.S. government and carry political and trade-policy implications. American Airlines Group Inc. Source
  • Boeing plays down Bombardier dispute, still hopes to sell fighter jets to Canada

    Economic CTV News
    OTTAWA - A senior Boeing official says the U.S. aerospace giant's trade dispute with Montreal-based rival Bombardier is a "company-to-company issue." And Leanne Caret, the head of Boeing's massive defence, security and space division, still hopes to sell Super Hornet fighter jets to Canada. Source
  • Full list of 59 Sears Canada stores slated to close

    Economic CTV News
    Sears Canada will be closing stores in every province except Prince Edward Island, as the retailer slashes 2,900 jobs amid a major restructuring effort. Sears filed for court protection from creditors on Thursday, before announcing that it will close 20 full-line locations, 15 Sears Home stores, 10 outlet stores and 14 Sears Hometown locations. Source
  • Canadian retail sales top April forecasts

    Economic CBC News
    Canadian consumer spending in April was stronger than expected, which economists say lends weight to the Bank of Canada's recent suggestions that interest rate hikes could be on the way. Statistics Canada reported Thursday that retail sales for April rose by 0.8 per cent on a monthly basis to $48.6 billion. Source
  • Warren Buffett’s company buys into Toronto-based Home Capital

    Economic Toronto Sun
    TORONTO - Home Capital Group Inc. says American investment firm Berkshire Hathaway Inc. has agreed to indirectly acquire $400 million of its common shares in a private placement and provide a new $2 billion line of credit to its subsidiary, Home Trust Company. Source
  • Sears Canada cutting 2,900 jobs, closing 59 locations

    Economic Toronto Sun
    TORONTO — Sears Canada said Thursday it is seeking court protection from its creditors in order to restructure its business. The struggling retailer has piled up losses and seen its stock dive, losing more than 80 per cent of its value in the last year, despite efforts to reinvent itself at a time when more Canadians are shirking bricks-and-mortar in favour of online shopping. Source
  • New cryptocurrencies offering more than just a way to pay for things online

    Economic CTV News
    OTTAWA -- The success of bitcoin has spurred the launch of hundreds of copycat digital payment systems looking to cash in on the popularity of the cryptocurrency. But now a new generation of digital assets are gaining momentum, offering to do more with blockchain -- the technology that powers bitcoin as a currency -- than just allow a way to pay for things online using virtual Internet money. Source