The Chinese economy ended 2013 with a real growth rate of 7.7%, the same as in 2012. While this more than met the government’s full-year target of 7.5%, growth was soft by historical standards, again equalling the country’s slowest growth rate since 1999. Focusing on Q4 alone suggests the Chinese economy ended the year on a weak note. The official data put seasonally adjusted GDP growth at 1.8% q/q in Q4, or 7.4% annualised, a marked slowdown from Q3’s 9.3%.
A slower-growing economy is typically adduced as evidence of economic rebalancing and a more sustainable growth mix. It is now almost seven years since former Premier Wen Jiabao cautioned at a March 2007 news conference during the National People’s Congress that China’s growth was “unstable, unbalanced, uncoordinated and unsustainable”. But, while the Chinese economy has slowed considerably since then, behind the numbers, there are few signs that the much-hyped rebalancing has started.
From an expenditure perspective, the economy’s dependence on investment increased in 2013. National accounts data for real expenditure are not available in China and nominal levels are only published with a substantial lag. However, based the expenditure components’ contributions to GDP growth, we have derived their real levels. Our historical estimates are close to those of the World Bank…