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China's annual growth slows to a 25-year low

January 19, 2016

The Chinese economy grew 6.9 percent during the last year, marking its lowest level of growth in a quarter of a century. While China's growth rate remains high compared to the West, observers fear a protracted slowdown.

Symbolbild China Industrie Arcelor Mittal Automotive Steel Co. in Hunan
Image: picture-alliance/dpa

Economic growth in China fell short of the 7-percent target set by the government for 2015, official data showed Tuesday.

China has been performing strongly during recent years, but the country is burdened by weak exports, sluggish investment, factory overcapacity and high debt levels. The troubles of the world's second-largest economy are also a major concern for global investors.

Growth in investment in factories, housing and other fixed assets weakened to 12 percent in 2015, down 2.9 percentage points from the previous year. Retail sales growth dropped to 10.6 percent from 2014's 12 percent. Spending on online commerce grew by 33.3 percent compared with 2014.

Beijing has been struggling to control the cooldown - mainly by cutting interest rates and ramping up spending during the last year.

China's top securities regulator, Xiao Gang, has reportedly offered to resign after perceived mismanagement wiped more than $5 trillion (4.59 trillion euros) off the capitalization of the Shanghai and Shenzhen stock markets since their peak in June last year.

Challenges 'to overcome'

China's leaders are trying to reduce the nation's reliance on manufacturing, and set up domestic consumption and investment as the new economic engines.

This structural transformation was still underway, the National Bureau of Statistics (NBS) said while presenting the latest numbers on Tuesday.

The effort is in a "crucial period during which challenges need to be overcome and problems need to be resolved and the task of comprehensively deepening the reform is still heavy," the officials said.

The growth rate for 2015 was the lowest since growth fell to 3.8 percent in 1990, after international sanctions were placed on Beijing following its crackdown on the Tiananmen Square pro-democracy movement.

Outpacing the West

According to the NBS data, the Chinese economy grew by 6.8 percent during the last quarter of 2015, which is the weakest quarterly growth since the Great Recession took its toll in early 2009.

China's unemployment is at 5.1 percent, NBS chief Wang Baoan said.

Analysts predict that the nation's growth will slow down even more in 2016, edging towards 6.5 percent, according to a report by the Reuters news agency. The International Monetary Fund expects a 6.3 percent expansion.

However, even this rate of growth is far above that of the US, which is currently estimated at 2.4 percent by analysts at the bank JP Morgan Chase, or Germany's, which is around 1.7 percent.

dj/jm (AP, AFP, Reuters, dpa)