BEIJING: As international markets watch anxiously, China is due to release a flood of data on Tuesday that are likely to show economic growth slowed in the latest quarter but still is among the world’s strongest.
BY THE NUMBERS: Private sector forecasters say growth in the world’s No. 2 economy at best came in slightly above the previous quarter’s 6.9 per cent and at worst fell as low as 6.4pc.
That would be less than half 2007’s peak of 14.2pc. But it would be the second-strongest among major countries, surpassed only by India, which is one-tenth China’s size.
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 to self-sustaining growth driven by domestic consumption and services.
For the full year, the International Monetary Fund and private sector forecasters expect 2015 growth to have slowed to 6.8pc. That would be in line with the ruling party’s goal of “about 7pc.”
Growth is forecast to slow further this year and next before rebounding toward the end of the decade.
POSITIVE SIGNS: Forecasters say retail sales and other industries likely improved in December, suggesting government spending and repeated interest rate cuts have helped to put a floor under the downturn.
Lending growth in December exceeded forecasts. Surveys showed manufacturing activity weaker than forecast, but analysts say it still grew. Investment in factories, housing and other fixed assets also is expected to have ticked up, helped by heavier government spending on public works construction.
Nomura analyst Brian Tan expects 4Q growth to be slower than 3Q, mainly due to weaker financial services, but says the “timelier December slew of data should hint that growth is stabilising.”
ANXIETY ABROAD: On edge about the possibility of a global slowdown, foreign financial markets have taken every shudder from China as a sign of an impending slump.
Slower Chinese economic growth, and especially the end of the country’s frenzied construction boom, has damped demand for iron ore, copper and other industrial raw materials from Australia, Brazil and other suppliers.
Weakness in investment or consumer spending could hurt demand for technology and higher-margin manufactured goods from Europe, the United States and Japan.
STOCK MARKET TURMOIL: The collapse of a Chinese stock price bubble in June fuelled fears abroad and raised doubts about Beijing’s management skills but had little impact on the rest of the economy.
Published in Dawn, January 19th, 2016
