Chinese Growth at 7.4% Is the Slowe

Chinese Growth at 7.4% Is the Slowest Since 1990
China’s economic growth beat economists’ estimates last quarter, helping the full-year expansion remain close to the government’s target and suggesting stimulus efforts have started to boost demand.

Gross domestic product rose 7.3 percent in the three months through December from a year earlier, the statistics bureau said in Beijing, beating the median estimate of 7.2 percent in a Bloomberg survey of analysts. The economy expanded 7.4 percent in 2014, the slowest pace since 1990. The yuan rose and swap rates increased after the data.

The central bank cut interest rates for the first time in two years in November and the government accelerated the approval of infrastructure projects to boost an economy mired in a property slump and overcapacity. Robust external demand fueled by the U.S. recovery has helped underpin growth as the economy transitions away from investment-led expansion.

“Markets should breathe a sigh of relief as the economy enters 2015 in a better shape than had been expected,” said Dariusz Kowalczyk, an analyst at Credit Agricole CIB in Hong Kong. “The data lowers the need for further stimulus, but there remains some room for easing as risks are skewed to the downside.”

China one-year interest rate swap advanced 3 basis points to 3.235 percent, while five-year contracts climbed 3 basis points. The yuan and the Australian dollar advanced.
Industrial Production

Industrial production rose 7.9 percent in December from a year earlier, compared with the 7.4 percent median estimate of analysts and November’s originally reported 7.2 percent. Retail sales increased 11.9 percent from a year earlier, compared with the 11.7 percent seen by economists.

Fixed-asset investment excluding rural areas expanded 15.7 percent last year, meeting the median estimate of economists surveyed by Bloomberg News.

Economists’ estimates for GDP growth last quarter ranged from 6.9 percent to 7.6 percent.

A recovering U.S. economy and demand from emerging Asian nations has helped underpin China’s expansion. Trade’s contribution to growth was about 10.5 percent last year, Vice Commerce Minister Zhong Shan said last week.

“Another important factor bolstering growth is services,” Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd., said before today’s data release. “China will take two or three years to switch from an old economy led by the property sector to a new one driven by services, high-end manufacturing and high-tech.”

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net James Mayger