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China economy grows 7.7% in fourth quarter

Sunday, 19 Jan 2014 | 9:01 PM ET
China GDP beats estimates, but markets don't care
Sunday, 19 Jan 2014 | 9:02 PM ET
Investors in Asia seemed to shrug off China's stronger-than-expected growth domestic product data. CNBC's Eunice Yoon describes some of the headwinds that may be weighing on sentiment.

China's economy grew stronger-than-expected 7.7 percent in the final quarter of 2013 from the year-ago period, according to official data from the National Bureau of Statistics Monday. That's ahead of a Reuters forecast of 7.6 percent.

Quarter on quarter, the world's second biggest economy grew 1.8 percent, a tad weaker than the consensus 2 percent Reuters had predicted.

This brings full-year growth to 7.7 percent, compared to government's target of 7.5 percent.

(Read more: Global economy at a turning point: World Bank)

According to Viktor Shvets, head of strategy research for Asia at Macquarie, the growth figures are less important than the rebalancing the economy needs to achieve.

The reform-minded new leadership, led by President Xi Jinping, has shown a tolerance for slower growth, while pledging to press ahead with efforts to revamp the economy for the longer term.

Tomohiro Ohsumi | Bloomberg | Getty Images

"China can deliver whatever number they want, the important thing is China trying to change. Can they restructure while keeping growth rates - not so much GDP but more personal income growth rates - at a reasonably high level, that's the dilemma for 2014," Shvets said.

(Read more: Can China contain high government debt?)

"The only way they can restructure the economy is by reducing savings. The only way they can do that is by destroying profitability for certain sectors; they need to reallocate the money," he added.

In other data, industrial output for December came in at 9.7 percent from the year earlier, compared to a Reuters forecast of 9.8 percent.

Retails sales were up an annual 13.6 percent in the month, in line with expectations.

China's benchmark stock index dropped below the 2,000 level for the first time in six months following the data while the Chinese yuan hovered at 6.0535 yuan against the dollar.

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