China's 2015 GDP growth at 25-year low of 6.9%

China's economic growth slowed to a 25-year low in 2015, expanding by 6.9 per cent on the year, according to the latest government statistics.

That's down from 7.3 per cent in 2014, with an unexpectedly sharp decline in the last two years as the ruling Communist Party attempts to restructure the economy to one driven by domestic consumption and services.

The figures for the fourth quarter of the year came in at 6.8 per cent, the lowest in six years.

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Of greater concern to economists, the underlying indicators of the economy show a marked slowdown in business investment, manufacturing, trade and consumer spending, fueling fears over China's performance for the coming year.

China devalued its currency in August in an effort to boost trade figures, but that helped set off a stock market meltdown that shook markets around the world and drew global attention to its lagging growth.

Commodity prices have fallen worldwide as it became clear that the world's second-largest economy would not need as much metal, minerals and lumber as it has been consuming in the past.

2016 growth forecast at 6.2%

Fotios Raptis, senior economist with TD Economics, estimates China's growth for 2016 will be slower still at 6.2 per cent.

"The latest set of data supports a slowdown in economic activity, but also confirms its resilience," he said in a note to clients.

"The data remains in alignment to our view that economic growth will continue to decelerate in 2016, as authorities act to implement changes that gear economic activity toward domestic consumption and services and away from the "old world" economy of industrial production."

Some economists have no faith in China's official economic statistics, believing them to be manufactured for political purposes.

Writing in Forbes, economist Gordon Chang points to growth of electricity consumption of just 0.7 per cent and a fall of rail freight volume of 10 per cent and estimated China's real GDP growth may be as low as one per cent for 2015. 

TD economist James Marple told CBC China's figures may be inaccurate, but there still are signs of growth, primarily from consumer spending.

"I would say that one per cent is probably a bit too low – maybe it's not six per cent, maybe it's closer to five per cent," he said in an interview with The Exchange. 

The manufacturing slowdown has a disproportionate effect on Canada because it affects commodity prices, he said.

"It is that goods-producing sector that demands commodities and that is where the slowdown is concentrated," Marple said.

Beijing responded to ebbing growth last year by cutting interest rates six times since November 2014, and launching measures to help exporters and other industries. But state-led construction spending and other investment still drives the economy and there is a marked slowdown in such investment.

Lowest in 25 years

Full-year 2015 growth was the lowest since sanctions imposed on Beijing following its crackdown on the Tiananmen Square pro-democracy movement caused growth to plummet to 3.8 per cent in 1990.

December exports shrank 1.4 per cent from a year earlier, well below the ruling party's target of six per cent trade growth. For the full year, exports were down 7.6 per cent, a blow to industries that employ millions of Chinese workers.

Raptis foresees a year of market volatility as the world adapts to a new, slower-growing China.

"Turbulence in Chinese financial markets this past year amid policy missteps has raised questions for the ability of Chinese authorities to manage the rebalancing of the economy. This is further complicated by the explicit goal of Chinese authorities to reduce excess capacity," he said.

But there are some indications retail sales and other activity accelerated toward the end of 2015, suggesting Beijing's efforts to put a floor under the downturn are gaining traction.

"The growth picture remains two-sided. The real estate construction slump and weak exports continued to weigh on activity," said Louis Kuijs of Oxford Economics in a report.

"Meanwhile, though, consumption continued to expand robustly, supported by solid wage growth," said Kuijs. "The robust growth in the consumption and services nexus is key for policymakers. They need it to avoid labour market stress."