Victoria Ruan
South China Morning Post
January 20, 2015
Data may pave way for leaders to cut annual growth target to as low as 7 per cent.
Mainland China’s economy grew 7.4 per cent in 2014 as expected, the slowest expansion in 24 years as it missed the annual growth target for the first time since 1998.
The data may pave the way for the Chinese leadership to decide on a cut on the annual growth target to as low as 7 per cent at the National People’s Congress meeting in March, as Premier Li Keqiang said downside risks were facing the economy at a Monday meeting.
In the fourth quarter, gross domestic product expanded 7.3 per cent from a year earlier, the National Bureau of Statistics said, which was on par with the growth rate in the third and slightly above market consensus at 7.2 per cent.
Premier Li said at a State Council meeting on Monday that “China’s development has entered a new normal.”
It’s also a key stage for the government to overcome various difficulties, he said, as the economy still faces “relatively large” downside pressures. He said the government’s tasks will still surround the centre of economic development, pushing forward structural reforms in a bid to promote a medium- to high-rate of growth.
The central bank has said it would pursue an appropriate, neither too tight nor too loose, tone for monetary policy, and pledged to continue with targeted adjustments when needed in selective areas.
A better-than-expected export growth last month gave some support to the economy, while fixed-asset investment (FAI) growth slowed a tad to 15.7 per cent last year from 15.8 per cent in the first 11 months. In 2013, FAI rose 19.6 per cent.
Property investment grew 10.5 per cent last year, significantly slower than the 19.8 per cent growth in 2013.
Industrial production growth accelerated to 7.9 per cent year on year in December from a 7.2 per cent rise in November. Retail sales gained 11.9 per cent in December, following an 11.7 per cent rise in the previous month and a 13.6 per cent rise in December 2013.
The results came as China’s A-share market posted a modest recovery today following an 8 per cent plunge – the most in six years – on Monday. Market participants will take their cue from the China’s fourth-quarter GDP figure.
The Shanghai Composite Index gained 26.78 points, or 0.86 per cent, to trade at 3,148.8 at 9.32 a.m. after opening at 3,114.56. It lost 7.7 per cent on Monday.
Monday’s drop was attributed to Beijing’s crackdown on brokerages’ margin business and a government proposal to tighten supervision of shadow banking products. The China Securities Regulatory Commission (CSRC) has banned Citic Securities, Haitong Securities and Guotai Junan Securities from opening new margin trading accounts for three months.
Brokerages were among the top decliners on the A-share market yesterday.
Hong Kong’s Hang Seng China Enterprises Index, which tracks mainland firms traded on the local exchange, posted its biggest single-day decline since November 2011.
The CSRC last night issued a statement urging investors to stay calm and not to read too much into its policies, a clear signal that Beijing wants to avoid further market turmoil.
