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China economic growth at 14-year low, heralds sober times

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China's economy grew 7.7 per cent in 2013 after easing in the final three months on sagging investment growth. China's economy grew 7.7 per cent in 2013 after easing in the final three months on sagging investment growth.
SummaryChina's GDP growth eases in the final three months on sagging investment growth.

China's economy grew 7.7 percent in 2013, the lowest in 14 years, highlighting the challenges faced by the world's second largest economy in sustaining its growth as it carry out sweeping reforms.

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

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