2016-01-20 / World / National

Latest gauge on China slowdown brings relief it wasn’t worse

Associated Press

BEIJING — The slowdown of China’s once-sizzling economy has fueled anxiety over its impact on the rest of the world.

Yet when Beijing reported Tuesday that its economy grew last year at the slowest pace in a quarter-century, the reaction seemed to be mainly relief it wasn’t worse.

Economists welcomed details in the report suggesting that the world’s second-biggest economy is making some progress in a difficult and complex transition – away from a reliance on manufacturing and investment in real estate and factories and toward dependence on services and consumer spending.

Stocks rose Tuesday in Asia and Europe. By midday, the Dow Jones industrial average was up modestly.

Beijing reported that economic growth fell in 2015 for a fifth straight year — to 6.9 percent, down from 7.3 percent in 2014 and the slowest rate since 1990.

For the October- December quarter, growth inched down to 6.8 percent, the weakest quarterly expansion in six years.

The deceleration is at least partially deliberate as the ruling Communist Party aims to manage the economy’s transition to a structure that will almost certainly deliver slower growth.

Tuesday’s report had signs of progress.

Services businesses accounted for a record 50.5 percent of China’s economic activity last year, the first time its share has exceeded 50 percent.

Charles Collyns, chief economist at the Institute of International Finance, sees considerable potential for more growth in China’s service sector.

In more developed economies, services account for perhaps 75 percent of economic activity.

China’s services have been held back by regulations and policies that favor inefficient state-owned service companies in such businesses as telecommunications and finance.

Services grew 8.3 percent last year, outpacing the traditional drivers of economic growth – manufacturing and construction – which together grew 6 percent.

Overall growth was in line with private-sector forecasts and the ruling Communist Party’s official target of about 7 percent for the year.

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