China growth softens in last quarter

Jan. 5, 2014 at 11:03 PM
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BEIJING, Jan. 5 (UPI) -- China's growth softened in 2013's fourth quarter as indicated by the purchasing managers' index both in manufacturing and non-manufacturing, economists said.

The PMI for the manufacturing sector, which is a key measure of factory output, fell to 51 percent in December from November's 51.4 percent. The December data was the first such decline since June. Any number over 50 on the PMI index denotes expansion while any number below that denotes contraction.

Similarly, the PMI for the non-manufacturing sector, which measures business activity in the services sector, fell to a four-month low at 54.6 in December as most industries sought to find new growth engines amid slowing exports.

Xinhua News Agency said the final official data for the fourth quarter and for all of last year, including gross domestic product growth, industrial production, retail sales and fixed-asset investment, would be released later this month.

China's GDP in the first nine months of last year grew 7.7 percent year-on-year.

Late last month, a Cabinet report presented to China's Parliament said the country's economic growth for all of 2013 is likely to stand at 7.6 percent, which would be the weakest performance since 1999.

Separately, Xinhua quoted Yukon Huang, economist and former World Bank director for China, as saying there is no need for China to rebalance its economy as has been suggested widely. Those supporting the need for rebalancing say that despite China becoming the world's second-largest economy after the United States, its investment and consumption are out of sync.

However, Huang told Xinhua in an interview that China is on the right track as rapid growth is essentially an "unbalanced process."

"Unbalance is not the problem," Huang said. "The problem is to make sure that you invest in the right things."

China's consumer spending in the first three quarters of 2013 accounted for 45.9 percent of the economic growth, while investment accounted for 55.8 percent, data showed.

However, Huang said China's consumption, in real terms, adjusted for inflation, has been rising for several decades.

He told Xinhua that when the United States was industrializing more than a century ago, it had "the most unbalanced growth process that we've ever seen." A similar situation existed when Japan, South Korea and Singapore were growing into high-income nations.

"So why should we think unbalanced growth is bad, when the growth processes of the successful countries have all been unbalanced," he said, warning resorting to balancing prematurely could lead to stagnation.

He also told Xinhua China's ongoing urbanization must become more efficient by curbing wasteful spending on infrastructure.

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