China on Monday trimmed its growth estimate for 2014 to 7.3 per cent from 7.4 per cent, already the weakest in 25 years, in a move set to spark concerns about the health of the world’s second-largest economy days after fears of a slowdown triggered global <g data-gr-id="90">stockmarket</g> panic. The revised gross domestic product (GDP) for 2014 based on preliminary verification came in at 63.61 trillion yuan ($10 trillion), down 32.4 billion yuan ($5 billion) from the preliminary calculation that put the annual rate at 7.4 per cent, National Bureau of Statistics (NBS) said.
Primary industries accounted for 9.2 <g data-gr-id="91">per cent</g> of the gross domestic product structure, unchanged from the preliminary calculation. The secondary sector accounted for 42.7 <g data-gr-id="92">per cent</g> of GDP, up 0.1 percentage points from the preliminary calculation, while the tertiary sector accounted for 48.1 <g data-gr-id="93">per cent</g>, down 0.1 percentage point from the earlier statistics, state-run Xinhua news agency reported.
The National Bureau of Statistics calculates each year’s gross domestic product three times — the preliminary calculation, followed by the preliminary verification and then the final verification, which is released several months later. China’s economy is headed for its slowest economic expansion in 25 years in 2015.
The new number remains the lowest since <g data-gr-id="114">1990,</g> when expansion plummeted to 3.9 <g data-gr-id="87">per cent</g>. The revised data on Monday came at a time when investors have become increasingly doubtful of the depth of the economic slowdown in China.
Chinese stocks have dipped around 40 <g data-gr-id="88">per cent</g> since mid- June after rising over 150 per cent in the previous 12 months. China, however, has tried to ratchet up market sentiments through rate cuts and last month it devalued its currency by nearly five percent against the US dollar in a single week, which sparked a global stock market havoc. Last year marked the weakest annual expansion for China in 24 years due to a housing slowdown, softening domestic demand and unsteady exports, and growth further slowed to 7 <g data-gr-id="89">per cent</g> in the first half of 2015 as the country braces for a “new normal” period of slower growth but higher quality.
In an assuring message to the market, China’s top economic planner said the world’s second-largest economy is stabilising and turning for the better, citing stabilising rail freight and a warming property market as proof for the improvement.
Since August, economic indicators such as power use, rail freight, home prices and transactions have all taken a favorable turn, showing economic operations stabilising amid fluctuations, according to a statement on the website of the National Development and Reform Commission.
Meanwhile, China’s foreign exchange reserves fell by a record $93.9 billion last month, reports said, as Beijing sold dollars to support its own currency following jitters over a sudden devaluation. The currency <g data-gr-id="94">hoard</g> declined by USD 93.9 billion to reach USD 3.56 trillion at the end of August, Bloomberg News said, showing the cost of China’s efforts to prop up the yuan.
The fall was larger than expectations, with a Bloomberg survey of economists giving a median forecast for the reserves of $3.58 trillion. August was the fourth consecutive month reserves fell, said the official news agency Xinhua, citing the central People’s Bank of China. In previous <g data-gr-id="123">years</g> China’s government bought dollars to slow the appreciation of yuan.
But the foreign currency reserves remain by far the world’s largest. China lowered the yuan’s central rate against the US dollar by five percent in a week last month, a move which added to turmoil in global markets where traders worried the move signalled weakness in China’s economy, a key driver of world growth.
<g data-gr-id="95">Policy makers</g> then changed tack, seeking to stabilise the currency. “If the central bank continues its intervention, China’s foreign exchange reserves will continue to shrink — the heavier the intervention, the deeper the fall,” Li Miaoxian, a Beijing-based analyst at Bocom International Holdings told Bloomberg. After decades of double-digit expansion, authorities are trying to pull off a tricky rebalancing — from an investment- and export-led economic model to one where domestic consumer demand drives slower but more sustainable growth.
Chinese policy makers at the weekend attempted to ease fears during a G20 summit meeting, saying the economy was broadly stable.