After an early argghh, investors had second thoughts about China’s December and 2015 economic data dump yesterday and markets recovered, sending shares and currencies higher.
In terms of reactions it was more a bump that boom, but it showed that the Chinese economy did not sag as many analysts and other ‘experts’ had been forecasting.
The data sparked a rise in markets in Asia with the Aussie share market up 44 points after an early dip. The Aussie dollar traded up to 69 US cents after a fall right after the release of the data at 1 pm; the Shanghai market bounced more than 3% and other markets had gains.
Even so the GDP data confirmed that China’s economy grew at its slowest pace since 1990 in 2015, but stayed within range of the government’s 7% target, as growth in services such as finance and healthcare cushioned the continuing slowdown in manufacturing and construction.
But the bottom line is that five interest rate cuts and a number of reductions in official reserve asset ratios for banks failed to boost economic growth. More likely they slowed the rate of fall, which is what they were probably aimed at doing.
Inflation-adjusted December-quarter gross domestic product growth of 6.8% puts meant full year growth of 6.9%, in line with Beijing’s target of “around 7 per cent” for the year.
On a quarter-on-quarter basis, economic growth slowed to 1.6% in the fourth-quarter, down from 1.8% in the third quarter.
The fourth-quarter figures were in line with market forecasts and statements from senior government leaders and media outlets in the past week to 10 days.
China’s services sector contributed 50.5% to the country’s GDP in 2015, up from 48.1% in 2014, the National Bureau of Statistics said yesterday. It was the first time the services sector has exceeded 50% of the economy since figures were first started two decades ago.
But despite the market rethink (how long will that last?), other data showed the economy is still sluggish with growth hard to come by.
The annual growth of China’s urban fixed-asset investment continued to cool in 2015 to 10% year on year, which was noticeably lower than the 15.7% growth rate in 2014.
And the annual growth of China’s property investment came to a partial halt last year, growing by just 1% against 10.5% in 2015.
Year-on-year factory output rose 5.9% in December, down from 6.0% in November and a nearly seven-year low of 5.6% in October. For the year, industrial output expanded by 6.1% down from 8.3% in 2014.
Retail sales rose 11.1% in December, surprisingly slower than the 11.3% in November and a nine-year low of 10% back in April. Retail sales in the year expanded by 10.7%, down from 12% in 2014 (the fall was because of the slowdown in the six months to June).
The statistics bureau said China’s national per capita disposable income stood at 21,966 yuan ($US3,349) in 2015, up 7.4% from 2014 in real terms, outpacing the 6.9% rise in GDP.
