HONG KONG — The giant Chinese economy picked up steam during the last few months of 2012, closely watched data from Beijing on Friday confirmed. But at the same time the figures underlined the view that the pace of future growth is likely to remain well below that seen in recent years.
China’s gross domestic product expanded 7.9 percent during the final quarter of last year, compared to a year earlier — slightly better than expectations, and significantly above the 7.4 percent pace recorded during the previous quarter.
Separate data for the month of December also came in a touch better than analysts had forecast: Retail sales expanded 15.2 percent from a year earlier, and industrial output grew 10.3 percent. Both figures were slightly better than those recorded in November.
The growth data “was the best we could have wished for,” Dariusz Kowalczyk, an economist at Crédit Agricole in Hong Kong, commented in a note. The figures “should put at rest any remaining doubt about China escaping a hard landing,” he added, referring to widespread fears last year that China could slow down sharply as the global turmoil, feeble domestic demand and a weak property market weighed on growth.
Stock market investors also welcomed the data. The Shanghai composite index rose 0.6 percent by around lunchtime, and in Hong Kong, the Hang Seng climbed 0.8 percent.
China’s mild re-acceleration has been helped by a gradual recovery in overseas demand for Chinese-made goods in recent months, as well as a string of economic stimulus measures announced by the government over the course of last year. These have helped put a floor under the beleaguered property market, and ramped up infrastructure construction activity, in particular.
The batch of data released by the Chinese statistics bureau on Friday also underlined that China’s once red-hot economy has now settled into a much slower pace of expansion.
The head of the statistics authority, Ma Jiantang, acknowledged as much at a press conference in Beijing: “I think you could use these two sentences to give a relatively concise assessment of economic performance in 2012,” he said. “First, national economic performance maintained stability while slowing; second, economic and social development made advances while maintaining stability.”
Annual expansion has slowed to around 8 percent — the pace for 2012 was 7.8 percent, down from the 9.3 percent in 2011 and the 10.4 percent in 2010 — and many economists expect a similar or slightly better pace for 2013.
Xianfang Ren, an economist at IHS Global Insight in Beijing, commented that Friday’s data confirmed “that the worst is probably over for the economy and that China has avoided a hard landing,” But it was “quite a narrow escape.” The economy will likely be “wiggling within quite a narrow band of growth rates in 2013, as the upside pull only marginally outweighs the downside drag,” Ms. Ren added in an e-mailed note.
Many analysts believe that the economy’s momentum may ease again later this year if the government alters policies in a bid to prevent inflation and property prices from heating up again.
Regulators also are watching out for potential problems caused by lending activities outside the regulated banking system, which have been an important driver of economic activity.
The growth of such non-bank credit, commented Yao Wei, an economist at Société Générale in Hong Kong in a recent research report, “is likely to slow once regulators respond seriously to risks rising from the shadow banking system.” Along with tighter property policies, Ms. Yao said, this factor is likely to cause the recovering momentum to fade late in the second quarter of this year.
Longer term, analysts believe the pace is likely to slow even further over the coming decade as the authorities pursue a shift towards higher-quality growth, and grapple with the gradual aging of the country’s population.
“China’s working-age population experienced its first absolute decline for some considerable time, and we are certainly taking this issue seriously,” Mr. Ma, the statistics bureau head, said Friday.
“For quite some time to come, and at least up until 2030, China’s working-age population aged from 15 to less than 60 years old will, I think, steadily and gradually shrink,” Mr. Ma said. This, he added, meant that it was important for China to raise labor productivity.
Chris Buckley contributed reporting.
Article source: http://www.nytimes.com/2013/01/19/business/global/chinese-economy-picks-up-steam-in-last-quarter.html?partner=rss&emc=rss
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