China GDP Growth Slows in Fourth Quarter but Exceeds Government Forecast
Economic growth in China slowed in the fourth quarter, but exceeded the government’s official target, even as Beijing sought to implement reforms that could limit growth over the next decade.
China’s gross domestic product grew at an annualized rate of 7.7 percent in the fourth quarter, compared to 7.8 percent in the previous three months, the National Bureau of Statistics reported today. China’s full-year expansion topped Beijing’s official target of 7.5 percent.
Compared to 2012, China’s economy is stagnating. The world’s second-largest economy expanded 7.7 percent that year, following a 9.3 percent advance in 2011. Looking ahead, China’s GDP is forecasted to expand 7.4 percent in 2014. China’s declining GDP growth is a reflection of Beijing’s reform strategy intended to bring about stability after decades of rapid expansion.
Beijing is shifting from exports to consumption in order sustain long-term growth and prosperity. Decades of runaway expansion were good for GDP, but as China seeks to become a more influential player in the global economy, the ‘growth-at-all-costs’ scenario will need to be replaced by something more sustainable.
On the topic of reforms, economists are split about whether they would be effective at this stage in China’s development. China’s dependence on state-backed enterprises poses a significant challenge to pursuing a more consumption-oriented strategy. At the same time, burgeoning credit growth and local government debt continue to show the nation is over-investing and under-consuming. With total debt rising 200 percent above GDP, reforms still have a long way to go to achieve consumption-oriented growth.
China’s retail sales were up 13.6 percent on the year in December, official data showed. Industrial production rose at an annualized rate of 9.7 percent in December, compared to 10 percent the previous month.
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