China's 2014 economic growth slowest in more than 2 decades
HONG KONG (AP) China's economic growth slowed to 7.4 percent in 2014, the weakest expansion in more than two decades, and is forecast to slip further over the next two years.
The numbers released Tuesday are still miles ahead of growth rates in major industrialized economies, but represent a sharp decline from sizzling double digit growth in previous years. That adds to pressure on the country's communist leaders as they try to prevent a sharper slowdown in 2015 while overhauling the economy.
The 2014 performance was the slowest for the world's second-biggest economy since 1990, when growth tumbled to 3.8 percent in the wake of economic sanctions after the Tiananmen Square crackdown. It undershoots the official full-year target of 7.5 percent.
China's slowdown is partly a function of Beijing's efforts to transform the economy, weaning it off overreliance on heavy industry and trade in favor of domestic consumption. But the transition has been buffeted by a range of problems, including a slumping property market and uneven exports.
Chinese officials have tried to lower expectations by saying growth below the official target would be acceptable.
President Xi Jinping said last year that the economy has entered a "new normal." But a surprise interest rate cut by policymakers in November indicated they were worried about a politically dangerous spike in job losses.
Growth in the fourth quarter of last year was 7.3 percent, unchanged from the previous quarter, which was the slowest quarterly expansion in five years. China's economy grew 7.7 percent in 2013.
At a news conference, Ma Jiantang, the director of the National Bureau of Statistics, said that last year's growth "was within a reasonable range" while growth in 2015 is expected to be "stable."
"However, we should also be aware that the domestic and international situations are still complicated and the economic development is facing with difficulties and challenges," he said.
Chinese businesses were bracing for a more painful year.
"The economic outlook is not so optimistic I'm afraid. Competition will be even more difficult," said Han Yi, a sales manager at Tianjin Yihsin Packing Plastic Co., which employs 700 people making plastic cups and cookie packaging at Tianjin, about an hour southeast of Beijing.
Han complained that sales in 2014 dipped about 5 percent from the year before and the company had to improve product quality and reliability to compete for new clients. Even then, it was able to win only one new account from a rapidly expanding customer.
"The situation would be much worse if we could not win this new client," he said.
Some analysts expect China to gradually dole out stimulus in 2015 to prevent growth from fading too fast. But they don't expect a major spending splurge as debt is already at worrying levels after the credit-fueled response to the 2008 global crisis.
"Credit risks will likely continue to prevent policymakers from using monetary policy too aggressively in order to shore up growth," said Julian Evans-Pritchard of Capital Economics, who forecasts 7.0 percent growth this year.
Consumption should receive a boost from the slump in global oil prices but is unlikely to fully offset the slowdown of investment in areas already suffering from overcapacity such as property and heavy industry, he said.
International agencies have trimmed their global growth forecasts partly in response to the slowdown in China, a significant driver of world economic growth.
The International Monetary Fund on Tuesday lowered its forecasts by 0.3 percentage point for each of the next two years, warning about persistent weakness in most major economies.
It downgraded its forecasts for China's growth over the same period, with 6.8 percent growth expected in 2015, down from an October prediction of 7.1 percent. The IMF's forecast for 2016 was cut by half a point to 6.3 percent.
AP researcher Fu Ting contributed.