Analyst say numbers out of China indicate that growth is slowing

After posting annual GDP growth of 7.4%, the Chinese economy seems to be continuing its impressive year-on-year growth, but analysts say the rise is slowing. 2014 marks the first time in 15 years that China has not reached its annual growth target of 7.5%, but growth figures still came in higher than market expectations of 7.2%, reports the BBC.  Chinese economy and energy consumption

In the energy sector, China’s power consumption rose 10.5% in December from November, reports the Wall Street Journal. Last month, China used 511.7 billion kilowatt-hours, the highest volume since August of 2013. China’s December electricity consumption rose 4.7% year-on-year. That is still higher than every preceding month since June, but only brings consumption in line with levels from the first half of 2014. Consumption for the full year, which was 5.52 trillion kWh, rose just 3.8% from 2013, or half the rate from the previous year.

The International Monetary Fund (IMF) also downgraded its growth forecast for China to below 7%, saying that growth has slowed and will likely moderate further. Some feel that even the IMF’s outlook is too kind. In an interview today with BNN, Patrick Chovanec, Chief Strategist for Silvercrest Asset Management, said he believes the IMF forecast is still overly optimistic. When referring to the economic growth numbers being released by China, Chovanec said: “These are fragile numbers not based on fundamentals. Even the slightest push could send them toppling over.”

Chovanec said that slowing growth could be a sign of an investment boom wearing off in China, and that it could hurt those invested in operations like oil and mining but not damage the world economy. “If you’re pumping for oil or mining for ore and China isn’t demanding as much as the investment boom levels off, obviously you’re going to take a hit,” he said. Chovanec believes a healthier world economy will emerge if China, which has been rapidly growing since the 1990s, reaches an economic plateau.

“Output is going to level out and maybe even fall, but they’ve accumulated $4 trillion of reserves, which is global buying power,” he said. “It won’t stop slowing GDP growth, but it may become a driver for growth around the world.”

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