China's 2014 economic growth misses target, hits 24-year low

Tue Jan 20, 2015 7:40am EST
 
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By Kevin Yao and Pete Sweeney

BEIJING/SHANGHAI (Reuters) - China's economy grew at its slowest pace in 24 years in 2014 as property prices cooled and companies and local governments struggled under heavy debt burdens, keeping pressure on Beijing to take aggressive steps to avoid a sharper downturn.

European and Asian shares in fact rose on relief that the news was not worse; the Shanghai Composite index gained 1.85 percent, Japan's Nikkei 225 index saw its biggest one-day gain in a month and European markets rallied.

But for investors worried about growth in China and the world this year, the data poses two questions:

Will the soft numbers and expectations of further weakness force the central bank to pump hundreds of billions of dollars into banks system-wide to prop up growth? And if so, what does that mean for Beijing's attempts to reform its economy?

The world's second-largest economy grew 7.4 percent in 2014, official data showed on Tuesday, barely missing its official 7.5 percent target but still the slowest since 1990, when it was hit by sanctions in the wake of the Tiananmen Square crackdown. It expanded 7.7 percent in 2013.

Fourth-quarter growth held steady at 7.3 percent from a year earlier, slightly better than expectations.

Few had expected China to meet its 7.5 percent full-year target, but the performance was better than some had feared after a rough few months raised concerns the economy may be heading for a hard landing.

"The country's period of miraculous break-neck growth is over, but let's get over it," said a commentary on the official Xinhua news service, referring to a long string of double-digit expansion.   Continued...

 
A worker rides past a poster showing Beijing's central business district outside a construction site in Beijing, December 29, 2014. REUTERS/Jason Lee