China economic growth at slowest pace since 1999
China’s gross domestic product (GDP) expanded 7.7% in 2013 from a year ago, the slowest pace of growth since 1999, official figures show.
Chinese economy is the world’s second largest.
The growth rate was higher than the government’s target of 7.5% and the same as in 2012.
The data highlights the challenge policymakers face in sustaining China’s high growth rate as they look to rebalance the economy.
Many analysts expect the country’s growth rate to slow as it takes steps to move away from an investment-led growth model to one driven by domestic consumption.
China’s growth rate slowed to an annual rate of 7.7% in the October-to-December quarter, down from 7.8% in the previous three months.
“The figure showed China’s economy had touched the bottom in the third quarter of 2013 and then stabilized in the end of last year,” said Li Huiyong, an economist with Shenyin & Wanguo Securities in Shanghai.
“We expect the trend will continue in 2014 as the policymakers [are] determined to push forward the reforms to maintain stable economic growth.
“We maintain our 2014 GDP growth forecast of 7.5% as we still need to be on guard for the risks from debt problems in the economy.”
A government-led investment boom has been a main factor driving China’s growth in recent years.
Chinese banks, especially the big four state-owned lenders, lent record sums of money in the years after the global financial crisis in an attempt to sustain the country’s high growth rate.
However, there have been concerns that part of that money has gone towards unproductive investments and that banks may not be able to recover those loans.
The fear among many is that a jump in bad loans – ones that cannot be repaid – would not only hurt the country’s banking sector, but also have a big impact on its overall growth.
There are also concerns over the growth of shadow banking – lending by non-banking companies – in the country.
Critics have warned that shadow banking makes credit less transparent and poses a major risk to China’s economic growth.
Earlier this month, various media reports indicated that China had drafted rules calling for greater supervision and monitoring of the shadow banks.
Banks have been told to publish data on 12 key indicators, including off-balance-sheet assets, to enhance their transparency.
Many analysts have said that curbing lending growth to address these concerns could would probably have a negative impact on China’s economic growth.
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