The chinese government reported on Tuesday that the GDP grew 6.8% for the fourth quarter and 6.9% for 2015. This report indicated the biggest slowdown for the world’s second-largest economy since 2008.
China's policy making ability is now the biggest concern for global investors. Since Chinese stock markets keep volatility and yuan currency continue devalued, making investors worry about the economy may worsen quickly.
“The real economy basically hasn’t picked up very well,” said Nomura Group economist Yang Zhao. “We’re going to have a choppier sea ahead of us.”
Weak exports, factory overcapacity, slowing investment, a soft property market and high debt levels are all serious problems for China government as it trying to transfer economy from a centrally planned model to a market-oriented model which will require leaders to reduce market control. The stock markets also affected the GDP growth and erasing gains from an unsteady recovery after summer crash. Moreover, economists stated, the ways the government has usually used to revive growth—infrastructure spending, ramped-up exports and easy credit —seems not as effective as before.
Zhang Yiping, a Chinese Merchants Securities’ economist, said "The policy to boost the property industry conducted in 2015 hasn't taken effect yet. I see more downward risks for China's economic growth in 2016, and they actually look fairly severe." Property investment rose only 1%, the lowest since last seven years, while new construction slumped 14%.
According to the Chinese government’s statistics bureau, GDP growth rate in 2015 was decrease 0.4% compared with the 7.3% gain in 2014. Doubts have been raised about the reliability of China’s economic data, though, and 2015’s reported rate sparked renewed concern that growth is slowing faster than the government is saying.
“China’s reported growth rate for 2015 raises many questions rather than providing full reassurance about the economy’s true growth momentum,” said Eswar Prasad, a professor of trade policy at Cornell University and the former head of the International Monetary Fund’s China division.
Other data reported on Tuesday indicated China's economy continued to lose momentum late in the year, which will keep the pressure on the local stock market and feed expectations of further weakness in the yuan as more capital flows out of China.
Industrial output increased 5.9% in December from a year earlier, missing forecasts of 6.0% and down from November's 6.2%. Retail sales increased 11.1% in December, less than an 11.3% rise expected by the market and November's 11.2%. Fixed-asset investment grew 10.0% in 2015 from the previous year, also missing market expectations. Certainly, there are some parts of the more than $10 trillion economies that are looking better as 2016 begins. The house sales and prices continued to increase in December though a full-blown property recovery is not expected anytime soon.
On the factory side, car sales are seen growing 6% in 2016, accelerating from last year on demand for more green cars and sport-utility vehicles, good news for the likes of General Motors.
"Sluggish prices and efforts to reduce capacity in some industries have dragged on industrial performance," analyst Guo Lei at Founder Securities said, "In 2016, due to a possible bottoming out of commodities, and easing deflation, an expected stabilization in cyclical sectors could give some support to the economy. We expect to see some recovery after the second quarter of this year."