This marks the lowest annual growth rate since 1999
China’s economy grew 7.7 per cent in 2013, the slowest growth rate in 14 years, with tapering growth in the last quarter of the year highlighting the challenges faced by the world’s second-largest economy as it grapples with rebalancing and reviving a slowing down economy.
Monday’s data marked the lowest annual growth rate since 1999, when the economy grew 7.6 per cent, and underlined, according to analysts here, the continuing shift to a period of slower growth, as the government attempts to move away from the State investment-led model that enabled rapid growth over the past two decades but left structural imbalances.
Only in 2010, China defied the global financial crisis and grew at 10.4 per cent, as the government unveiled a massive $586 billion stimulus of infrastructure spending. Three years on, alarmed by overcapacity in several sectors, mounting local government debt, an overheated property market and a worsening environmental crisis, the government has attempted to shift its focus away from high growth rates to achieving more balanced and sustainable growth driven by domestic demand.
Growth slowed in the fourth quarter to 7.7 per cent, down from 7.8 per cent in the previous quarter. This brought annual growth down to 7.7 per cent, from 7.8 per cent in 2012.
Ma Jiantang, head of the National Bureau of Statistics (NBS), attributed the slower growth to a “complex and severe situation” at home and abroad. “If you look at first half of the year, the domestic and international situation was complex and severe, and economic recovery in developed countries was quite slow,” he said. “The downward economic pressure in China was mounting”.
Monday’s data showed the government had made only modest progress in 2013 in its goal of transforming the State-led investment model and boosting domestic consumption and innovation industries. Fixed asset investment recorded 19.6 per cent growth — the slowest growth in a decade — reaching 43.6 trillion yuan ($7.2 trillion), marking a decline from last year’s 20.6 per cent figure. However, retail sales grew by a less than expected 13.1 per cent, reaching 23.4 trillion yuan ($3.86 trillion), underlining slowing domestic demand.
Lu Ting, chief China economist at Bank of America Merrill Lynch, said in a note to clients one reason was “softer sales growth as the government continued to crack down on luxury consumption” under an anti-corruption campaign launched by the new leadership.
Mr. Ma of the NBS expressed optimism that the restructuring process had made some headway. “The share of the tertiary industry in China’s GDP was 46.1 per cent [up from 44.6 per cent in 2012], and this is the first time that it has surpassed the secondary industry in terms of share of GDP,” he said.
Regional imbalances between the prosperous coastal east, which has driven China’s export-led growth over the past decades, and the hinterland, had also narrowed, he said.
The share of GDP of central and western regions was 44.4 per cent, up 0.2 per cent from last year. The urban-rural income gap had also declined, to 3.03 from a highest level of 3.33 in 2009.
Mr. Ma highlighted burgeoning local government debt, spurred by infrastructure spending, as a challenge in 2014.
This was echoed by Zhang Liqun, an economist with the Development Research Center of the State Council or Cabinet, who pointed to overcapacity in some industries as another pressing problem.