China's economy slows to 6.7%, its lowest in 26 years

China's GDP growth last year tanked to its lowest level in more than a quarter century at 6.7%, amid a scandal that a key province in the world's second-largest economy fudged data for years and concerns over a likely trade war with the US under Trump administration.

China's growth in 2016 was its slowest in 26 years, data released by the National Bureau of Statistics (NBS) said on Friday.

The economy slowed down from 6.9% in 2015, when it slipped below the 7% but still well within the government's target range of 6.5-7%. Growth in the fourth quarter ending in December came in at 6.8%, a little higher from the 6.7% in the third quarter.

In its recent forecast, the IMF has projected China's economic growth this year to be around 6.5%.

Ning Jizhe, the vice-chairman of National Development and Reform Commission and Commissioner of the NBS who released the data, said as per the IMF projections China will become the fastest-growing economy in the world.

The IMF has cut downed India's growth by one percentge point from 7.65%, projecting China once again to become the fastest-growing economy in the world.

As per today's data, China's GDP totalled 74.41 trillion yuan ($10.83 trillion) in 2016, with the service sector accounting for 51.6%, overtaking for the second year its fast slowing manufacturing sector, which in the past three decades fired the country to become a global export hub.

China's $2 trillion exports, highest in the world, this year slumped for the second consecutive year in 2016 by 7.7%.

The continued economic slowdown — stated to be the new normal but at a modest range — came under fresh scrutiny after the Northeastern Chinese province of Liaoning admitted cooking up its books from 2011 to 2014.

"The fake fiscal figures influenced the central government's economic judgment and accordingly led to a lowering of the size of transfer payments to the province," Liaoning governor Chen Qiufa told the provincial legislature on Tuesday, citing a document from the National Audit Office.

It also meant local residents carried a higher tax burden because a bigger share of the province's funds went to central coffers, Hong Kong-based South China Morning Post reported.

"Data distortion harmed the judgement of policymakers in 2016 when the government unleashed a hefty monetary and fiscal stimulus to shore up investment," it quoted Shen Jianguang, the chief economist at Mizuho Securities Asia, as saying.

Asked about the falsification of the data by Liaoning

province, Ning said strict action will be taken against those who doctored the figures. "We will be bring those responsible to justice and no leniency will be shown in this respect."

Liaoning, once a thriving base for heavy industry, reported a rare contraction in economic growth last year. Struggling state-owned enterprises, a reluctance by both private and foreign companies to invest in the area and a population exodus have weighed down the province's economy.

Also, China's economic figures come as Trump takes over US presidency amid a tough talk on China-US trade ties which, according to Chinese state media, fanned fears of a trade war.

The Chinese commerce ministry yesterday reminded Trump about lucrative trade ties between the two countries becoming a mainstay of the relationship. Sino-US trade volume grew from $2.5 billion in 1979 to about $519.6 billion in 2016, surging by 211 times within 38 years, the ministry said.

With over $400 billion exports to US, China, however, has a lion's share in the bilateral trade. Besides restoring trade balance with protectionist policies, Trump has accused Beijing of devaluing its currency to boost export revenues.

Today's NBS data showed China's major economic indicators softened last year, with industrial output growth slowing slightly to 6% from 6.1% in 2015.

Urban fixed-asset investment continued to cool, rising 8.1% year-on-year, compared with 10% in 2015.

Retail sales rose 10.4%, down from 10.7% in 2015.

China's retail sales of consumer goods grew 10.4% year-on-year in 2016, the same as in the first three-quarters, official data showed on Friday.

Total retail sales of consumer goods hit 33.23 trillion yuan ($4.84 trillion) last year as China seeks to boost its domestic spending as part of efforts to alter the course of its export-dependent economy to a domestic consumption driven.

The data showed strong consumption potential in rural areas, with retail sales expanding 10.9%, outpacing the 10.4% rate in urban areas.

The NBS said retails sales of communication equipment and housing goods had grown fast. Sales of communication equipment jumped 11.9% year-on-year, furniture went up 12.7% and building and decoration materials soared 14%.

Online sales boomed last year, surging 26.2% year-on-year to reach 5.16 trillion yuan.

In December, the nominal growth of retail sales was 10.9% year-on-year, higher than 10.8% increase in November.

Retail sales of consumer goods, a key indicator of consumption, are expected to jump by 10.2% year-on-year to exceed 37 trillion yuan in 2017, contributing more than 70% of China's economic growth.