China has announced its official growth rate for 2015 which is the lowest in a quarter century but some economic commentators suggest that the real rate was lower.

China's economy grew 6.9% year on year in 2015 compared with 7.3% in 2014, according to data from the National Bureau of Statistics (NBS) published in Beijing Tuesday. Growth in the fourth quarter came in at 6.8% year on year, the lowest quarterly rate since the global financial crisis, the data showed.

 

Gross domestic product (GDP) reached ¥67.67tn yuan (about $10.3tn) in 2015, with the service sector accounting for 50.5%, the first time the ratio exceeded 50%, according to the NBS.

China's economy still "ran within a reasonable range" in 2015, with its structure further optimized, upgrading accelerated, new growth drivers strengthened and people's lives improved, Wang Baoan, NBS chief, told a press conference, according to Xinhua, the official news agency.

However, the country faces a daunting task in deepening reforms on all fronts and needs to step up supply-side structural reforms, he said.

Major economic indicators softened in 2015, with industrial output growth slowing to 6.1% year on year from 8.3% in 2014, NBS figures showed.

Urban fixed-asset investment continued to cool, expanding 10% year on year, compared with 15.7% in 2014. Retail sales rose 10.7%, down from 12% registered in 2014.

"China's ability to continue to post such rapid and relatively stable growth, even as it has increasingly become a source of volatility in global equity and commodity markets, will undoubtedly attract a great deal of skepticism," said Julian Evans-Pritchard of Capital Economics.

Instead of 6.8%, Evans-Pritchard estimates growth in the fourth quarter was in reality closer to 4.5% but stable.

The upshot is that while the official GDP figures shouldn’t be taken at face value, growth does appear to have been broadly stable last quarter and the December data, although mixed, don’t suggest that China is now entering a deeper economic crisis. On the contrary, with the tailwinds from recent policy stimulus still gathering we actually expect the data to gradually turn more upbeat over the next few months.

Zhao Yang of Nomura, the Japanese broker, said:

Doubts about China’s economic data are mainly due to differences between nominal and real gross domestic product figures that account for prices changes. For a lot of companies, what matters for them are the nominal figures amid deep industrial deflation and that’s why many market players think the official figures are better than how things really are. Retail sales and investment both came in lower than expected in nominal terms, he says.

The Financial Times said:

Despite the respectable headline growth figure, pain is deepening in the sectors that have traditionally driven Chinese growth and global commodity demand. Without adjusting for inflation, growth in industry and construction was a paltry 0.9% for the full year, a sign that nearly four years of producer-price deflation has ravaged cash flow in the factory sector. Overall, nominal GDP grew just 5.8% in the fourth quarter and 6.4% for the full year, implying that the overall economy is in deflation.

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Pic above: Xi Jinping, Chinese president, opens an economic symposium attended by ministers and provincial officials in Beijing, 18 Jan, 2016. Photo: Xinhua