China’s economy grew by 7.7 percent in 2013, the same rate as last year, which was the slowest since 1999, according to new data released by the government.
On Monday the National Bureau of Statistics (NBS) released fourth quarter economic figures, which showed the economy growing by an annualized rate of 7.7 percent from October to December, down from the 7.8 growth recorded during the third quarter when the government ordered an investment-heavy mini-stimulus to revive falling numbers.
The annual GDP growth was also 7.7 percent, slightly higher than the 7.5 percent that Chinese government officials indicated would be the floor rate that they would accept. The 4Q growth was also slightly higher than the 7.6 percent economists expected.
Most economists, however, expect growth to continue to slow in 2014 as China tries to transition to an economic model less reliant on investment. The Financial Times estimates that China will grow 7.4 percent in 2014, which would be the slowest growth since 1990 in the aftermath of Tiananmen Square.
China’s post-financial crisis credit boom has fueled growth over the past few years but also created unsustainable imbalances in the economy that Chinese policymakers are seeking to correct. So far Xi Jinping’s administration has only marginally reined in credit expansion.
“”I don’t see any evidence of an (economic) rebalancing last year. It doesn’t look like there’s any reduction in the current account surplus and the savings and investment gap probably didn’t change,” Tim Condon of ING in Singapore told Reuters.
Fixed asset investment did slow to a 19.6 percent annual growth rate, down from 19.9 percent in the first 11 months of 2013 and 1.1 percent lower than in 2012. Aggregate financing was also down in December from the year before but held steady when compared with November.
Growth in retail sales in December was also 13.6 percent, down from 13.7 percent in November and industrial production slowed to 9.7 percent, from 10 percent the month before. China also missed its export target of 8 percent in 2013.
Zhu Haibin, chief China economist at JPMorgan, told the Financial Times ““The headline GDP growth figure for 2013 is strong, but momentum is clearly slowing, with infrastructure investment in December coming in quite weak. We expect investment to slow further this year, particularly in real estate and infrastructure.”
Both the Wall Street Journal and the Global Times note that property sales helped propel economic growth in 2013. “Total property sales rose 26.3% to 8.14 trillion yuan ($1.34 trillion) in 2013, up from the 10% gain recorded in 2012,” the Wall Street Journal remarked. Property sales and pricing varied widely from city to city. The Chinese government has sought to cool the property market, particularly in cities like Beijing, Guangzhou and Shanghai where housing costs are often out of the reach of ordinary Chinese. Investment in property development also rose 19.8 percent in 2003, nearly 4 percent above the growth rate in 2012. Meanwhile, the People’s Daily reported on Monday that Beijing expects revenue from land sales in January to hit a new monthly high.
There appears to be growing concern abroad over the health of China’s financial system amid rapidly rising debt accumulation. The International Monetary Fund released a report last week that said China’s debt is higher than official figures and, while still at manageable levels, China is now “more vulnerable to a macroeconomic shock” because of fiscal imbalances. Newsweek also featured a story in its weekly magazine this week titled “Beijing’s Bubble.”