China's economy grew at its slowest pace in 24 years in 2014 as a cooling property market weighed on demand and is expected to lose more momentum this year, keeping pressure on policymakers to head off a sharper downturn. But analysts said a slightly better-than-expected performance in the fourth quarter could temper Beijing's policy response, if the government and central bank believe the strains on the world's second-largest economy are starting to ease.
-- Sends signal Beijing can tolerate slower growth: economist
-- More easing still expected, property remains key risk
China's economy grew 7.4 percent in 2014, official data showed on Tuesday, barely missing its official 7.5 percent target but the slowest since 1990. It expanded 7.7 percent in 2013. Fourth-quarter growth held steady at 7.3 percent from a year earlier, marginally better than expected, though it cooled from the previous three months. Few had expected China to meet its 7.5 percent full-year target, but the performance was better than feared at one point when credit collapsed, bad loans spiked and key activity indicators fell to multi-year lows.
A series of modest support measures from the government over the year helped stave off worries of a more dramatic slowdown, without fuelling a sharp rise in China's mountain of debt which the country's leaders are trying to avoid. "This is the best possible miss you could have from a messaging standpoint," said Andrew Polk, economist at the Conference Board in Beijing. "The government is saying, 'we're not married to this specific target, we missed it and we're okay.' That seems to me a quite positive development."
However, Polk said the figure was difficult to square with more negative signs emerging from other parts of the economy. China's property market - a major driver of demand across a range of domestic industries - has proven stubbornly unresponsive to policy support, and lending data from the banking system shows enduring weakness despite policymakers' repeated and varied attempts to boost investment.
The weak property market and high funding costs remain key risks facing the economy in 2015. Policymakers also are concerned about the potential onset of a deflationary cycle, aggravated by plummeting energy prices, industrial overcapacity and sluggish demand. At the same time, there may be a looming crisis among debt-sodden local governments which are facing strains from sliding property sales, on which they rely for much of their revenue. In another worrying sign, power output growth in China, used by some as a proxy for economic performance, posted its slowest growth rate since 1998 at 3.2 percent.
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