China Snaps Seven Quarters of Economic Slowdown
China's economy grew 7.9 percent in the fourth quarter of last year from a year earlier, rebounding after seven straight quarters of slowdown, but an uncertain global outlook means Beijing may need to keep tweaking policy to support growth.
The fourth-quarter bounce from 7.4 percent in the third quarter - the lowest since the depths of the global financial crisis - left full year growth at 7.8 percent, making 2012 the weakest year of economic expansion since 1999.
The figures, announced by the National Bureau of Statistics on Friday, were slightly stronger than market expectations in the consensus Reuters poll, which had pegged fourth-quarter gross domestic product (GDP) growth at 7.8 percent and put the full year at 7.7 percent.
"Momentum at the end of the year is fairly strong but it's not really an astonishing rebound," said Ken Peng, an economist at BNP Paribas in Beijing.
"For the first half of this year the economy will continue to be fairly solid, but China's trend growth is still set to slow down." On a quarterly, seasonally adjusted basis, the economy grew by 2.0 percent versus 2.3 percent seen in the Reuters poll.
Other data released alongside GDP showed industrial output grew 10.3 percent in December from a year ago, versus expectations of 10.1 percent. Retail sales in December rose 15.2 percent on a year ago versus an estimated 14.9 percent in a Reuters poll.
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Annual fixed-asset investment growth was 20.6 percent in 2012, versus the 20.7 percent forecast in the Reuters poll. The government only publishes cumulative investment data.
China's target for annual GDP growth was 7.5 percent in 2012, lower than an 8 percent goal in the previous eight years to show its commitment to structural changes. The GDP growth target will be 7.5 percent in 2013, according to sources.
A fourth-quarter recovery had been heralded by an acceleration in industrial output in October and November and a jump in exports in December, although some analysts believe last month's sharp expansion in trade could be a blip.
China's exports grew 14.1 percent last month compared with a year earlier, racing past market expectations of 4 percent and November's 2.9 percent pace.
In the absence of any big-bang stimulus, Beijing has quickened the pace of infrastructure investment and provided incentives to encourage consumer spending on energy-efficient home appliances to support growth.
Chinese leaders, while warning that the global economic malaise may last longer than expected, have promised to maintain policy "fine-tuning", Beijing's mantra throughout last year, in 2013 to keep growth stable.
Economic stability is seen vital for Xi Jinping and Li Keqiang, who are due to take over as president and premier, respectively, in March, as they have pledged to push forward structural reforms to sustain long-term growth.
The central bank, which cut interest rates twice in mid-2012 and cut banks reserve ratios (RRR) three times since late 2011, has since switched to short-term cash injections via open market operations to guide monetary policy, apparently fearful of fanning price pressures or encouraging a property bubble.
Average new home prices in 70 major Chinese cities rose 0.3 percent in December from November -- the fifth month in the last six to show a rise -- according to Reuters calculations based on official data published on Friday.
Rising housing prices could be a fresh headache for China's policymakers as worries resurface about the sustainability of investment in the sector.