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Growth of Chinese economy slowest in 25 years

China’s economy grew at the slowest rate since the end of the 1980s in 2015 with a 6.9% growth rate for last year, a drop of 0.4% from the previous 12 months.

The strength of the Chinese economy is seen as an indicator of the health of the global economy and the recent turmoil on China’s stock exchange has caused havoc in international markets. The latest overall figures continue to increase concern for investors across the globe.

Authorities in Beijing are playing down any panic about the figures and had set a growth objective of around 7% for 2015, with China’s Premier Li Keqiang saying decreased growth levels are not an issue provided sufficient new jobs are created.

Some analysts believe the growth figures are lower than being officially reported, with numbers dropping towards 6.8% growth in Q4.

The giant Asian country is in transition after huge growth sustained over a period of more than 10 years. The Chinese want to move towards a consumption and services based economy, rather than rely so heavily on exports and investment.

However, China still depends massively on its vast manufacturing sector and that will not change overnight. Indeed the news of China’s second consecutive year of slowing growth is no great surprise, with regular reports of its manufacturing industry slowing and subsequent reactions on the stock market causing chaotic scenes already this year.

For the Chinese and for those with investments in the Far Eastern behemoth economy there are genuine worries about the future. Annual growth figures are important to the global economy as a whole but the monthly data released by the Chinese is also scrutinized heavily, with some analyst believing the figures are often far from accurate.

Retail data and monthly industrial production figures for December were slightly worse than expected and that of course had a knock on effect on global markets.

Catherine Yeung from Fidelity International was quoted by the BBC providing the following analysis, “The health of the labour market, retail sales and industrial production data are all key indicators for growth. Like any economic data, it’s important to look at the themes and trends that drive them and not just the headline figure. When you look at China with this lens, we’re not seeing a meltdown, just a slowdown.”

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joe@custard.co.uk'

John Hampton

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