China Economic Growth in 2014 Slowest in Two Decades
The economic growth in China slowed in 2014 to 7.4%, which was its weakest growth in close to 25 years. The government has been forecast to slip even further in the upcoming two years. This has added to the headwinds in the global economy.
The Tuesday numbers are still way ahead of the growth rates in all major industrialized economies. However, they represent a steep decline from the sizzling double digit growth China experienced in previous years.
In turn, that adds pressure on the communist leaders of the country as they attempt to prevent a sharper downturn and losses in jobs while putting the economy through an overhaul.
The performance in 2014 was the slowest for the second largest economy in the world since 1990. At that time, growth fell to 3.8% after the country was faced with economic sanctions due to the Tiananmen Square incident.
The final growth was less than the 7.5% target set by the country’s leaders, which was the first miss experienced since 1998, said analysts.
Economists expect there to be a deepening of the slowdown clouding the overall outlook for the global economy as China begins to downshift from a supercharged era of growth that fueled demand from iron ore from Australia to luxury goods across Europe.
In a Tuesday report, the International Monetary Fund cut its growth forecasts for the world economy for 2015 and 2016, citing the weakness in China as its biggest factor.
It said the growth rate in China would drop to 6.3% during 2016. The weakness in China will inhibit growth for nations it buys imports from, especially across Asia, said the IMF report.
Businesses in China braced for a difficult year.
The slowdown in China is partly the function of efforts in Beijing to transform its economy by weaning it from overreliance on trade and heavy industry in favor of more domestic consumption.
However, the transition has been hit with a number of problems that include a property market slump and choppy exports.