China’s economy grows at 6.9 percent in 2015, slowest in 25 years

According to China’s GDP data, the world’s second largest economy grew at its slowest pace since 1990 last year amid signs of a deepening slump in manufacturing and fixed-asset investment, the country’s traditional growth engines.

Inflation-adjusted fourth-quarter gross domestic product growth of 6.8 per cent places the full-year figure at 6.9 per cent, broadly in line with Beijing’s target of “around 7 per cent” for the year and in line with economists’ expectations.

The data come as fears about the state of China’s economy have shaken global markets and capital leaves the country at an unprecedented pace. Investors are eager for clues about whether sharp declines in China’s equity market and currency depreciation in the opening weeks of this year are a sign of acute distress in the real economy, or whether policymakers can engineer a gradual slowdown that avoids financial crisis and social instability. The 2016 growth target is 6.5 per cent.

Resilient growth in the emerging services sector helped cushion the slowdown in manufacturing and construction. The services sector grew 8.2 per cent in real terms in the fourth quarter versus 6.1 per cent for the industrial sector.

Despite the respectable headline growth figure, pain is deepening in the sectors that have traditionally driven Chinese growth and global commodity demand. Without adjusting for inflation, growth in industry and construction was a paltry 0.9 per cent for the full year, a sign that nearly four years of producer-price deflation has ravaged cash flow in the factory sector.

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