BEIJING (Reuters) - China's economic growth eased to 6.8 percent in the fourth quarter from a year earlier, matching expectations but still the slowest since the global financial crisis, putting pressure on policymakers to roll out more support measures as fears of a sharper slowdown pummel global financial markets.
Analysts polled by Reuters had predicted gross domestic product (GDP) in the world's second-largest economy would grow 6.8 percent in the fourth quarter, compared with 6.9 percent in the prior quarter.
That put full-year 2015 growth at 6.9 percent, down from 7.3 percent in 2014 and the slowest pace of expansion in a quarter of a century. Economists had expected 6.9 percent.
Oct-Dec quarter-on-quarter growth was 1.6 percent, the National Bureau of Statistics said on Tuesday.
Economists had expected growth of 1.7 percent on a quarterly basis, compared to a revised reading of 1.8 percent in the prior quarter.
KEY POINTS
Q4 GDP +6.8 pct y/y (f'cast +6.8 pct, prev +6.9 pct)
Q4 GDP +1.6 pct q/q (f'cast +1.7 pct, prev +1.8 pct)
Dec industrial output +5.9 pct (f'cast +6.0 pct, Nov +6.2)
Dec retail sales +11.1 pct (f'cast +11.3 pct, Nov +11.2)
Jan-Dec fixed asset investment +10.0 pct (f'cast +10.2 pct, Jan-Nov +10.2 pct)
Jan-Dec property investment +1.0 pct (Jan-Nov +1.3 pct)
COMMENTARY:
ZHOU HAO, SENIOR EMERGING MARKETS ECONOMISTS ASIA, COMMERZBANK SINGAPORE
"While headline growth looks fine, the breakdown of the figures points to overall weakness in the economy."
"We think that China's economy will grow 6.3% in 2016 versus consensus expectations around 6.5%. While further slowdown in investment is inevitable, steadily growing consumption supported by the services industry will help reduce the "tail risk" facing the economy.
"All in all, we believe that China will experience a "bumpy landing" in the coming year.
"In order to facilitate the deleveraging process, China's monetary policy should remain extremely accommodative. From a policy perspective this implies that PBOC will cut RRR and interest rates again in the coming months and maintain a broadly accommodative monetary policy."
XIAO SHIJUN, AN ANALYST AT GUODU SECURITIES, BEIJING
"The GDP figures in Q4 and 2015 were in line with market expectations, and thus the market has not responded negatively to the data. Looking forward to 2016, the market expects China's economy to continue to slow down, possibly to around 6.5 percent growth for the year. Unless the growth slows sharply and much lower than the 6.5-percent mark, it will not be a major negative factor for the stock market."
ZHANG YIPING, ECONOMIST AT CHINA MERCHANTS SECURITIES, SHENZHEN
"There were seasonal factors related to the slow growth of GDP in Q4, but I think the main factor is property, with a consecutive decline in the past few months that appeared to accelerate. The policy to boost the real estate industry conducted in 2015 hasn't taken effect yet."
SUAN TECK KIN, ECONOMIST, UNITED OVERSEAS BANK, SINGAPORE
"The important thing to think about is, domestically, reforms are still going on. All these reforms, purging excess capacity etc. are still going on. So we still have to watch for the downside as well. There might be some more deterioration."
"Although so far the indication seem to point to some stabilisation but we do have to watch out for this sort of risk."
LOUIS KUIJS, HEAD OF ASIA ECONOMICS AT OXFORD ECONOMICS, HONG KONG
"I think that at least the biggest fears about the real economy, fears that came to the surface during the stock market rout...I think those biggest fears were overblown."
"This kind of data suggests that developments in the real economy are nothing to write home about, growth will continue to slow in 2016 as that real estate downturn continues to weigh over the economy."
"We don't see signs of an abrupt slowdown, or something getting worse than we had expected say six weeks ago."
LIU LI GANG, ECONOMIST AT ANZ, HONG KONG
"In terms of fiscal and monetary policy, there should be more stimulus but I don't think a big stimulus will be warranted particularly in monetary policy."
"I want to caution that China is in a debt, deflation led economic slowdown and the process is very difficult for traditional monetary and fiscal policy to change the trend of the growth path - that is continued slowdown in the coming years. We see 6.5 percent growth this year and 2017 will slow further to 6.0 percent. During the process, the government needs to accelerate reforms by attacking high leverage issues in Chinese corporate sector and local government sector."
MARKET REACTION
Most Asian share markets slightly trimmed gains after the data while China's stock indexes also gave up modest opening gains. The Australian dollar dipped as the December data missed forecasts.
Many Asian stock markets have slumped into bear market territory or are close to it due to a flare-up in concerns over the health of China's economy, confusion over its foreign exchange policy and slumping oil prices.
BACKGROUND
- China's decision to allow a sharp drop in the value of the yuan currency early in 2016 ignited a heavy sell-off in global financial markets as investors feared it could signal a dramatic deterioration in the economy. The central bank had sparked a similar panic in August 2015 when it devalued the currency by nearly 2 percent.
- Turmoil in China's foreign exchange and stock markets have added to concerns that policymakers in Beijing may not be able to engineer a soft landing for the economy, let alone prevent a hard landing that would jeopardise the global economy.
- Though 2015 growth was around the government's target of 7 percent for the year, some China watchers suspect real growth is much weaker than official GDP data suggest.
- While China imported a record amount of crude oil last year, its refiners had to export a record amount of oil products due to sluggish demand at home. China's power consumption rose only 0.5 percent from 2014, while rail freight volumes reportedly dropped by 10 percent.
- China's economy is being weighed down by weak exports, factory overcapacity, a soft property market, high debt levels, a government anti-corruption campaign and slowing investment.
- China's leaders have set out five key goals for 2016 including reducing overcapacity, reducing the huge inventory of unsold homes, deleveraging balance sheets, reducing costs for businesses and encourage new industries and technology. However, few specifics have been announced and some analysts believe volatile markets may slow or even halt progress on structural reforms.
- More policy easing and stimulus measures are expected in coming months to shore up economic activity.
- The central bank has already cut interest rates six times since November 2014 and reduced the amount of cash that banks must hold as reserves to spur activity, though some analysts say such moves have not been as effective as in the past when the economy was more tightly controlled and debt levels were much lower.
- Other support measures have included increased government spending on infrastructure and the easing of curbs on the ailing property sector, which have succeeded in reviving weak home sales and prices but have not yet reversed a sharp decline in new construction which is weighing on demand for materials from cement to steel.
(Reporting by Reuters SHANGHAI newsroom and Asia bureaus; Compiled by Shri Navaratnam and Kim Coghill)
