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China GDP hits target but other key data shows its economy weakening

Annual economic growth is expected to slow from 6.9% to 6.8%. Photo: Shutterstock.

Chinese GDP is out, and it’s right in line with expectations at 6.8% annualised for the December quarter.

Despite meeting forecasts, it was the slowest growth rate since the first quarter of 2009.

Full-year growth was 6.9%, roughly in line with the government’s target of 7.0% for the year. It was the slowest annual expansion recorded since 1990.

According to China’s National Bureau of Statistics, the preliminary estimate for GDP was 67,670.8 billion yuan, or around $10,300 billion, for the year.

Growth across China’s tertiary industries – predominantly services – increased by 8.3% to 34,156.7 billion yuan, outpacing growth in secondary (27,427.8 billion yuan) and primary industries (6,086.3 billion yuan) of 6.0% and 3.9% respectively.

The breakdown suggests that China’s economic transformation away from industrial, trade and investment-led growth to that powered by services and consumption is, on face value, continuing as planned.

“In 2015, faced with complicated international environment and increasing downward pressure on the economy, the Central Party Committee and the State Council have maintained the strategic focus, comprehensively arranged both domestic and international tasks, adhered to the general work guideline of making progress while maintaining stability, actively adapted to and led the new normal, guided new practices with new theories, strived for new development with new strategies, innovated macro-regulation, deepened the structural reform and pushed forward mass entrepreneurship and innovation,” wrote the NBS.

“As a result, the economy has achieved moderate but stable and sound development.”

While the GDP figure was bang on expectation, industrial production, retail sales and urban fixed asset investment growth – released alongside the GDP report – all missed to the downside in December.

From a year earlier industrial production grew by 5.9%, down on the 6.2% pace of November and expectations for a moderation to 6.0%.

Retail sales growth also decelerated, coming in at an annual rate of 11.1% against expectations for an increase of 11.3%. It was the first month since July 2015 that the annual rate was slower than the month before.

Rounding off the trifecta of monthly misses, urban fixed asset investment slowed to an annual pace of 10.0%. The figure, below the 10.2% pace of November, marks the slowest annual increase since the early 2000s.

Whether due to the disappointing monthly data, or simply that a GDP figure is almost always around expectation leading to a “buy the rumour, sell the fact” scenario, risk assets have given back earlier gains following the data dump.

Currencies such as the Australian and New Zealand dollars – those closely aligned with the performance of China’s economy – are both trading lower while stocks across the region are mixed.

Chinese stocks are fluctuating around the flatline while offshore trade yuan, or USD/CNH, is moderately higher at 6.5951.

Here’s the full Asia market scoreboard as at 1.35pm AEDT.

Stocks

  • ASX 200 4883.60 , 24.90 , 0.51%
  • Nikkei 225 16834.13 , -121.44 , -0.72%
  • Shanghai Composite 2915.04 , 1.21 , 0.04%
  • Hang Seng 19307.62 , 70.17 , 0.36%
  • KOSPI 1869.90 , -8.55 , -0.46%
  • Straits Times 2600.76 , 7.76 , 0.30%
  • S&P 500 Futures 1883.75 , 8.75 , 0.47%

Forex

  • USD/JPY 117.27 , -0.04 , -0.03%
  • USD/CNH 6.5966 , 0.0149 , 0.23%
  • AUD/USD 0.6842 , -0.0021 , -0.31%
  • NZD/USD 0.6423 , -0.0022 , -0.34%
  • AUD/JPY 80.24 , -0.27 , -0.34%
  • EUR/USD 1.0898 , 0.0008 , 0.07%
  • GBP/USD 1.4239 , -0.0002 , -0.01%
  • USD INDEX 99.108 , 0.1520 , 0.15%

Commodities

  • Gold $1,089.31 , $0.71 , 0.07%
  • Silver $13.94 , $0.01 , 0.04%
  • WTI Futures $29.04 , -$0.38 , -1.29%
  • Copper Futures ¥35,040 , ¥150 0.43%
  • Iron Ore Futures ¥318.00 , ¥0.50 , 0.16%

10-Year Bond Yields

  • Australia 2.695%
  • New Zealand 3.330%
  • Japan 0.201%
  • Germany 0.478%
  • UK 1.693%
  • US 2.042%

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