by Staff Writers
Beijing (AFP) Jan 20, 2014
China's economy last year registered flat growth of 7.7 percent, maintaining its slowest expansion in more than a decade as the government warned Monday of "deep-rooted problems" including a mountain of local authority debt.
Gross domestic product (GDP) expansion for the October-December quarter also came in at 7.7 percent, the National Bureau of Statistics (NBS) said, from 7.8 percent in the previous three months.
The 2013 GDP figure was the same as that for 2012 -- which was the worst rate of growth since 1999 -- and matched the median forecast in a survey of 14 economists by AFP. It exceeded the government's growth target for the year, which was declared as 7.5 percent.
Growth for the fourth quarter was better than the AFP survey's median forecast of 7.6 percent.
"Generally speaking China's economy showed good momentum of stable and moderate growth in 2013, which is (a) hard-earned achievement," NBS chief Ma Jiantang told reporters. The agency also reported positive data for industrial output, retail sales and fixed asset investment.
"However, we should keep in mind that the deep-rooted problems built up over time are yet to be solved in what is a critical period for China's economy," Ma said.
Since the 1980s, China has shaken off the lethargy of the Communist command economy with reforms that brought years of blistering growth, making its GDP second only to the US and establishing it as the world's biggest trading power in goods.
But it is expected to face slower expansion in future.
Its leaders under President Xi Jinping say they are committed to transforming China's growth model to one where consumers and other private actors play the leading role, rather than huge and often wasteful state investment.
Yet such fundamental change will likely take time. The NBS data showed the contribution of investment to GDP growth rose last year, to 54.4 percent, while consumption's share fell.
For 2014, the median forecast in the AFP survey was for 7.5 percent growth.
"Judging from the data, our outlook for 2014 remains that China's economy will continue slowing down in the first half," Wendy Chen, Shanghai-based analyst for Nomura International, told AFP.
Within the past decade Chinese growth was regularly in double digits, but it has been slowing and the 2013 result has it in single figures for three consecutive years for the first time since 2002.
China's GDP totalled 56.88 trillion yuan ($9.39 trillion) in 2013, the NBS said. It gave the country's Gini co-efficient -- a measure of income inequality with 0 representing perfect equality and 1 total inequality -- as 0.473, a minuscule improvement on 0.474 in 2012.
Ma of the NBS said China faces problems including dealing with burgeoning local government debt.
"The risk of local government debt should be prevented and greater efforts are to be made to weed out out-dated production capacity," he said.
China's leaders are also concerned about its financial system including "shadow banking" and government debt, particularly at regional level.
The results of a long-awaited debt audit last month showed local governments liabilities had ballooned to 17.9 trillion yuan as of the end of June, up 67 percent from the end of 2010.
Local authorities have long used debt to fuel growth in their regions, often by pursuing projects that are not economically viable or sustainable.
While few see the problem as a systemic threat, the debt issue is considered a serious potential drag on the economy unless steps are taken to rein it in.
Analysts also say shadow banking -- non-transparent, less regulated credit -- can stoke asset bubbles and threaten stability.
The term refers to lending sometimes issued by legitimate banks and financial institutions, as well as private deals between individuals or companies, that have arisen as a way of getting around strict banking rules.
Separately, the NBS said industrial output rose 9.7 percent in December year-on-year, and expanded 9.7 percent over 2013.
Retail sales gained 13.6 percent in December and 13.1 percent in 2013, it said.
And fixed asset investment, a measure of government spending on infrastructure, expanded 19.6 percent in 2013, the NBS added.
Hong Kong-based UBS Securities economist Wang Tao told AFP the main reason for a slowdown in fourth-quarter growth "was a decrease in infrastructure investment in the past few months, due to a stronger intention by the central government to control credit issuance and local government debt".
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