China’s growth rate hits lowest in 25 years

Experts predict a bumpy land for Chinese economy next year; markets rise in hope of a fresh stimulus

China’s economy grew at its weakest pace in a quarter of a century in 2015, raising hopes that Beijing would cushion the slowdown with more stimulus policies, which in turn prompted a rally on the country’s rollercoaster share markets.

Growth for 2015 as a whole hit 6.9 per cent after the fourth quarter slowed to 6.8 per cent, capping a tumultuous year that witnessed a huge outflow of capital, a slide in the currency and a summer stocks crash.

Concerns about Beijing’s grip on economic policy have shot to the top of global investors’ risk list for 2016 after a renewed plunge in its stock markets and the yuan stoked worries that the economy may be rapidly deteriorating.

Data from China’s statistics bureau showed that industrial output for December missed expectations with a rise of just 5.9 per cent, while electric power and steel output fell for the first time in decades last year, and coal production dropped for a second year in row, illustrating how a slowing economy and shift to consumer-led growth is hurting industry.

December retail sales growth was also weaker than expected at 11.1 per cent, disappointing those counting on the consumer to be the new engine of growth. “While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy,” said Zhou Hao, senior emerging markets economist for Asia at Commerzbank Singapore.

“All in all, we believe that China will experience a ‘bumpy landing’ in the coming year,” the economist said.

There was relief in the markets, however, that growth at least matched forecasts, and a growing expectation that more monetary easing measures were imminent.

However, Tommy Xie, economist at OCBC Bank in Singapore, feels “if the renminbi continues to weaken, the volatility and capital outflows get worse, then that is likely to pose a big challenge to economic growth.”