China's Growth Rate at 6.1% Last Year... Lowest in 29 Years (Comprehensive)

China's Q4 Growth Rate Stalls at 6%
2024 Growth Forecast in the 5% Range...Assessment of 'New Normal' Entry

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Last year, China's economic growth rate barely reached 6%, marking the lowest level in 29 years. With forecasts suggesting it will fall to the 5% range this year, there is an assessment that China has entered a new standard (New Normal) where high-speed growth is no longer possible. In the socialist country of China, people's livelihood is a crucial issue directly linked to regime stability. As the Chinese economy chooses quality over speed and enters the New Normal, revisions to economic policies are also expected to be inevitable.

On the 17th, China's National Bureau of Statistics announced that last year's economic growth rate was 6.1%. Although it was within the government's growth target range (6~6.5%), it was the lowest figure since 1990, when it recorded 3.9% just before the start of high growth. Quarterly figures also showed a slowdown trend, from 6.4% in Q1 last year to 6.2% in Q2, 6.0% in Q3, and 6.0% in Q4. The growth rates for Q3 and Q4 last year were the lowest since quarterly statistics began to be compiled in 1992.

Last year's growth rate fully reflected the impact of the US-China trade war, which intensified from July 2018. Various indicators that reveal the overall economic situation, such as industrial production, retail sales, and fixed asset investment, frequently showed slowed growth rates due to the trade war's impact. Monthly industrial production growth peaked at 8.5% in March last year but fell to 4.4% in August, the lowest level in 17 years. Amid the uncertainty of the US-China trade war, Chinese consumers tightened their belts, causing retail sales growth rates in April and October last year to drop to 7.2%, the lowest in 16 years. Fixed asset investment growth also retreated to historically low levels.

Given that China's annual growth rate peaked at 10.6% in 2010 and has been gradually declining since, there is a view that China's high-speed growth has reached structural limits. It is said that entering the 5% growth rate range is not unusual and that China has entered the 'New Normal.'

In recent years, the economic policy emphasis on maintaining a 6% growth rate, known as Baoliu (保六), has also been openly abandoned. Chinese Premier Li Keqiang already indicated in an interview with Russia's TASS news agency in September last year that "it is very difficult for an economy as large as China's to maintain high-speed growth above 6%," signaling preparation for the era of Baoliu's collapse. Experts also expect that Premier Li will set this year's growth target around 6% in the government work report at the upcoming major political event, the Two Sessions (National People's Congress and Chinese People's Political Consultative Conference) in March. However, since the economic growth rate is not expected to drop sharply, gradual changes are anticipated in the medium to long term. Lee Chi-hoon, head of the Emerging Economies Department and senior fellow at the International Finance Center, emphasized, "Since a gradual slowdown is expected to continue, having GDP in the 5% range is not a big problem," adding, "The extent of the slowdown is more important than the 5% growth rate itself."

Tommy Wu, Senior Economist at Oxford Economics, diagnosed, "It is natural for China's growth rate to continue declining over time," and stressed, "What matters is whether it transforms into a sustainable long-term pattern."

Meanwhile, in December last year, industrial production increased by 6.9% year-on-year, surpassing the market expectation of 5.9%. Retail sales in the same month also recorded an 8% year-on-year growth rate, exceeding the market forecast of 7.9%.

This content was produced with the assistance of AI translation services.