China’s economy grew by 6.9 per cent last year, in tune with official projection of “around 7 per cent” growth. The numbers signalled that the government was so far on track of transitioning the economy from manufacturing to the lower growth “new normal” path, where consumption and services would dominate.
Though last year’s growth was the slowest since 1990, it nevertheless calmed nerves in the global market, which had feared that the Chinese economy was on the brink of a “hard landing” following the recent mayhem in the stock market and spurts of currency volatility. Consequently, the data emerging from China’s National Bureau of Statistics (NBS) triggered a significant rally in industrial commodities, in anticipation that Chinese demand may not be falling as sharply as feared.
Brent crude, the international energy benchmark, which had on Monday dropped to $27.67 a barrel-a 12 year intraday low-firmed up by 5.5 per cent to reach $30.12, following data from Beijing. Copper also rose to $4,447 a tonne, after dropping last week nearly to a seven-year low of $ 4,318.
The NBS figures revealed that China’s GDP stood at around 10.3 trillion dollars. Significantly, the services sector- the indicator of an economic shift from inefficient manufacturing - accounted for 50.5 per cent of the GDP. This was the first occasion that services sector’s contribution had breached the 50 per cent mark. Unemployment rate in major cities stood at around 5.1 percent. State-run Xinhua news agency reported that online retail sales of goods surged 31.6 per cent in 2015. Sales of new energy vehicles soared by more than 160 per cent, while the output growth for the high-tech industry reached 10.2 per cent, 4.1 percentage points higher than the overall industrial output. Yet, the figures showed that major hurdles had to be crossed before
the economy settled along the planned “new normal” path. For instance, industrial output growth slowed to 6.1 per cent year on year from 8.3 per cent in 2014. Urban fixed-asset investment continued to taper, expanding 10 per cent year on year, compared with 15.7 per cent in 2014. Retail sales grew 10.7 per cent, significantly below the 12 per cent recorded in 2014. For the first time in six years, foreign trade contracted in 2015.
Wang Boan, the head of NBS said at a press conference on Tuesday that tepid global trade, rising financial risks and changing domestic market conditions were among the factors that had affected the economy.
However, he asserted that China’s government debts were not a cause of anxiety, as they accounted for less 40 per cent of the country's GDP, well below the 60 per cent alert line that was internationally accepted.
Mr.Wang stressed that supply-side structural reforms were essential to streamline the economy.