Title : China's economy meets growth forecasts but analysts remain doubtful
link : China's economy meets growth forecasts but analysts remain doubtful
China's economy meets growth forecasts but analysts remain doubtful
China's economic growth has slowed in line with forecasts by economists, but many analysts warn the slowdown is far more serious than official figures show.
Key points:
- China's year-on-year economic growth slows from 6.5pc in September to 6.4pc in December
- Many analysts say Chinese GDP "is not an accurate gauge of economic growth"
- Industrial production in December was ahead of forecasts and retail sales met expectations
Official data from the National Bureau of Statistics show the Chinese GDP growth slowed to 6.4 per cent over the year to the end of December, down from 6.5 per cent in the year to September.
That was exactly in line with analyst expectations, but ANZ's chief China economist, Raymond Yeung, said most experts accepted that it was not an accurate reflection of economic reality.
"China's GDP number is not an accurate gauge of economic growth," he wrote in a note just ahead of the data release.
"But China's GDP is still relevant. An aggressive target of, say 6.5 per cent for 2019, will reinforce the Government's counter-cyclical stance.
"In 2019, we also need to bear in mind President Xi has ordered that China should celebrate the 70th anniversary of the People's Republic of China with good economic performance."
To that end, China has eased some key reserve requirements for banks to stimulate lending.
CommSec's chief economist, Craig James, said there was likely to be more such stimulus to come.
"China is determined to prevent a marked slowing of the economy," he wrote in a note on the data.
"It is a case of 'watch this space' for signs of how the stimulus efforts are supporting economic growth.
"In fact there were reasons to be encouraged in the December data, with production bettering forecasts, and property investment continues to grow at a near 10 per cent annual pace."
China data lifts dollar
However, China is having to tread carefully given a national debt-to-GDP ratio around 325 per cent, putting it among the ranks of highly indebted countries.
Today's data release also contained more recent figures from the month of December — retail sales, industrial output and urban investment.
Two of the three were close to expectations, with retail sales growing 8.2 per cent year-on-year and urban investment up 5.9 per cent.
Industrial production beat expectations, growing 5.7 per cent rather than the typical forecast of 5.3 per cent, and also stronger than November's 5.4 per cent result.
The better-than-expected industrial production report gave the Australian dollar a modest, and temporary boost.
From 71.5 US cents ahead of the release, the Aussie climbed as high as 71.82 shortly after, before easing back to 71.65 US cents by 1:19pm (AEDT).
Australian shares also got a temporary boost, briefly climbing above 5,900 points straight after the release, before edging back down to 5,893.
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