Data released Tuesday showed that China’s economy grew 6.8 percent (NYT) in the fourth quarter of last year, its lowest quarterly expansion (FT) since the global financial crisis in 2009. Growth for 2015 was 6.9 percent, the lowest annual pace in twenty-five years. The news comes as the International Monetary Fund said it expected China's economy to grow (WSJ) by 6.3 percent this year and 6 percent in 2017, with Beijing setting an official growth target of roughly 7 percent.
“Chinese analysts and government officials say the emphasis on supply-side reforms stems from the conviction that the economy is failing to meet the new demands of middle-class consumers — and also a recognition that the country’s large debt burden has reduced its capacity for additional demand-side stimulus,” writes Tom Mitchell for the Financial Times.
“The biggest fear about Chinese growth is that much worse is still to come. Total debt has gone from about 150% of GDP before the global financial crisis in 2008 to nearly 250% today. Increases in indebtedness of that magnitude have been a forerunner of financial woes in other countries. Cracks are beginning to appear in China: capital outflows have surged, bankruptcies are occurring more frequently and bad loans in the banking sector are rising,” writes the Economist.
“Another reason analysts are dubious of China’s data is the political weight the nation’s leaders attach to published economic growth rates. The Communist Party vowed to double 2010 output and income levels by 2020, a goal President Xi Jinping has stressed needs an average 6.5 percent expansion pace in the next few years to achieve,” writes Bloomberg.
CFR-Daily News Brief