Not much to say about the latest GDP figures, released today, which were in line with expectations. China’s economy grew by 9% last year, but the annual figure masks a rapid slowdown in the fourth quarter to 6.8%. It is also the slowest growth rate since 2001 and the first time growth has fallen into single digits since 2003.
So much for the numbers, but what of the future? Xinhua quotes government economist Wang Xiaoguang saying that the 6.8% fourth quarter growth rate was not a sign of a “hard landing,” just a necessary “adjustment” from previous rapid expansion: “This round of downward adjustment won’t bottom out in just a year or several quarters but might last two or three years, which is a normal situation.”
So expect more stimulus spending, easing of bank loan requirements and interest rate cuts. The was a sharp rise in renminbi bank lending in December (up 18.8 year-on-year, following a 17% rise in November; though the anti-inflation clampdown on bank lending a year back distorts the comparisons), which stirs some hopes that stimulus efforts are beginning to have an effect as the big state-run banks lend for infrastructure development.