Chinese economy at slowest in 25 years

By Staff Writer

Jan 20, 2016 12:50 AM EST

Registering slowest growth rate in 25 years, the world's second largest economy rose at 6.9 percent in 2015 as against 7.3 percent growth rate in 2014. Investors turned cautious about the fallout of slowing down in the economy. China's economy is forecast to grow at 6.3 percent in 2016 as against government's target of seven percent and six percent in 2017. 

Chinese government has set a growth target of seven percent for 2016. However, International Monetary Fund (IMF) made a forecast that the growth rate may be 6.3 percent this year and seven percent in 2017. Chinese Premier Li Keqiang says weaker growth would be acceptable as long as enough new jobs were created. 

BBC reports predictions by analysts and economists that any growth rate below 6.8 percent require further economic stimulus. China's economic growth rate in fourth quarter of 2015 was edged down to 6.8 percent, according National Bureau of Statistics. Some analysts comment that actual growth rate was weaker than official data.

China recorded over capacity in the industry and too much activity in the housing sector, opine some economists. The increasing debt is also alarming for China's economy. These factors make 2016 a tougher year for the dragon country. 

China's President Xi Jinping has urged the officials to stabilize the growth plans in a meeting held on Monday. Jinping discussed with senior officials on several issues on economic policy, as reported by The Wall Street Journal (WSJ). Chinese Premier Li Kequiang spoke on 'Increasing downward pressure' on the economy. The slack global demand is also impacting the Chinese economy. 

China's gross domestic product (GDP) growth is considered to be a major push to the global economy. The slowdown in China's economy is a major concern for investors across the world. After witnessing robust growth for over a decade, China's economy started slowing down in the past two years. 

CNN Money has stated that uncertainty over the outlook for the Chinese economy has worsened the global markets. China is the world's biggest market for commodities and there's slump in this segment. The global economy is witnessing oversupply of oil.

The latest growth data released on Tuesday didn't impact the investors much. The Shanghai Composite index was trading flat. Hang Seng index added 2.1 percent. 

The initiative of Chinese government to switch over to consumption and services-oriented economy is giving jitters to the country. The Chinese economy was growing encouragingly led by exports and investment. The transition has been very challenging for China. Some economists opine that dragon country's focus on consumption was misplaced. 

Nomura Group economist Yang Zhao said: "The real economy basically hasn't picked up very well. We're going to have a choppier sea ahead of us."

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