By Kelly Olsen, AFP
BEIJING–China’s economy failed to pick up speed last year despite a promising mid-year rebound, an AFP survey shows, staying mired at its slowest growth rate in more than a decade.
The outlook for 2014 is for renewed deceleration in the world’s second-biggest economy as the government cracks down on local debt problems and “shadow banking” — non-traditional lending practices seen as potential threats to the financial system. In a poll of 14 economists, the median forecast for gross domestic product (GDP) growth in 2013 was 7.7 percent, matching the actual result for 2012, which was the country’s worst performance since 1999.
The National Bureau of Statistics in Beijing is scheduled to announce China’s GDP results on Monday for the fourth quarter of last year and the full year. The economy entered 2013 with optimism for faster expansion, but hopes were dashed as growth tanked for two straight quarters before finally picking up to reach 7.8 percent in the July-to-September period. Performance in the final three months of the year was mixed, however, with a general view emerging that the pick-up was fading. The median forecast for fourth quarter growth in the AFP survey was 7.6 percent, while it was seen as slowing to 7.5 percent for full year 2014. Hong Kong-based Societe Generale economist Yao Wei said the government’s focus this year will be on “de-leveraging” — referring to efforts to tackle credit growth.
“It is still introducing more new policies targeting shadow banking, local government financing vehicles and so on, which will definitely lead to rather big downside pressures on the economy,” Yao told AFP. China on a Slowing Trend China’s economy is widely seen as facing slower expansion in the years ahead as its leaders say they are committed to transforming the country’s growth model to one where consumers and other private actors play the leading role, rather than huge and often wasteful state investment.
Within the past decade Chinese growth was regularly in double digits, but it has been on a slowing trend and Monday’s statistics are set to show it completing three consecutive years in single figures for the first time since 2002. Besides shifting the growth emphasis, China’s leaders are also concerned about the country’s financial system including shadow banking and government debt, particularly at the local level. China late last month announced the results of a long-awaited debt audit, revealing that liabilities carried by local governments had ballooned to 17.9 trillion yuan (US$2.95 trillion) 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 to be a serious potential drag on China’s economy unless steps are taken to rein it in.