China's economy eased in the final three months on sagging investment growth, a cooldown that some analysts say is a sign of the more sober times ahead as the government wrestles to implement major reforms.
With China stepping up its efforts to remake its economy by promoting domestic consumption at the expense of exports and investment, some analysts predicted that the world's second-largest economy may lose further momentum this year.
"I think it will be very difficult for growth to hit 8 percent this year," said Ting Lu, an economist at Bank of America-Merrill Lynch in Hong Kong, who expects China's economy to expand 7.6 percent this year.
"We expect the government to maintain neutral monetary policies and execute a slightly more proactive fiscal policy in 2014."
A suite of data out on Monday showed growth in factory output and investment in the world's second-largest economy lost steam in December, dragging overall economic growth in the fourth quarter to a six-month low of 7.7 percent.
That left 2013 growth in the 56.9 trillion yuan economy unchanged from revised levels in 2012, but helped it to narrowly miss market forecasts for activity to hit a 14-year trough of 7.6 percent.
The Australian dollar firmed slightly after the data while most Asian stock markets pared early losses.
"The economy may be a little more robust than people thought coming into 2014. I had thought the monetary tightening in 2013 would pose a downside risk in 2013. The numbers reduce that downside risk," said Tim Condon at ING in Singapore.
"I don't see any evidence of an (economic) rebalancing last year. It doesn't look like there's any reduction in the current account surplus and the savings and investment gap probably didn't change."
The fourth-quarter growth rate compared with 7.6 percent forecast by analysts in a Reuters poll but eased from 7.8 percent in the previous three months.
On a quarterly basis, gross domestic product (GDP) rose 1.8 percent in October-December, slower than expectations for 2.0 percent and a reading of 2.2 percent in July-September.
Analysts say other key risks to growth this year include policymakers' success in executing reforms and Beijing's prolonged battles to clamp down on risky lending, soaring home prices and a mountain of local government debt.
Property is a particularly thorny problem for policymakers. The sector is one of the few bright spots in the economy and the government has tried to walk a fine line between reining in rising prices that threaten affordability for average wage earners and stifling economic growth elsewhere.
Growth in real estate investment in China accelerated to 19.8 percent in 2013, a sign the booming market has resisted Beijing's sustained efforts to cool it down.
Graphics China's economy in graphics link.reuters.com/zeq95s
After 30 years of sizzling double-digit economic growth that lifted many millions of Chinese out of poverty but also devastated the environment, China wants to change tack by embracing sustainable and higher-quality development instead.
Any change is expected to come at a cost of more muted economic growth, a price Beijing says it is willing to pay.
Fixed-asset investment, a main driver of China's economy, rose 19.6 percent in January-December, slightly softer than expectations of 19.8 percent.
Industrial output, meantime, grew 9.7 percent in December from a year earlier, slightly less than expectations and moderating from November's 10 percent gain as factories struggled with lukewarm demand at home and abroad.
A Reuters visit to scores of factories in southern China this month showed China's manufacturing heartlands have closed earlier than usual this year for the nation's biggest holiday, discouraged by weak orders and rising costs.
Underlining China's subdued domestic demand, growth in retail sales was 13.6 percent, level with expectations and down slightly from November's 13.7 percent.
Sagging growth in investment and domestic demand come at a time when Chinese factories are also fighting fragile global markets. Sales of Chinese exports had underwhelmed last year, missing an official 2013 growth target of 8 percent.
Although many analysts expect China's export business to pick up this year, the country's trade ministry sounded a cautious note this week by saying domestic exporters may have trouble beating their 2013 sales performance this year.