China Posts Weakest Annual Growth in 24 Years, More Stimulus Expected (Reuters, Jan 20) China’s economy grew 7.3% year-on-year in the fourth quarter, even with the previous three-month period and just narrowly ahead of expectations. This result brings growth for the whole of 2014 to 7.4%, missing a government target of 7.5% and marking the slowest pace of expansion in over two decades. Despite Beijing’s apparent tolerance for the slowdown, some believe central authorities could soon roll out additional measures to maintain economic momentum.

RELATED: China Dec New Home Prices Slip, Sombre Omen for 2014 GDP (Reuters, Jan 18) Figures issued Sunday from the National Bureau of Statistics showed new home prices slipping for a fourth consecutive month in December. Specifically, 68 out of 70 major cities tracked by the bureau saw prices drop by an average of 4.3% year-on-year. Meanwhile, combined sales volumes in the statistical pool climbed nearly 7% from November to set a new monthly high for 2014. Residential developers China Vanke and Country Garden reportedly saw turnover jump 129% and 167% respectively from December 2013.

RELATED: China Growth Hit 24-Year Low in 2014: AFP Survey (AFP, Jan 17) China’s GDP was believed to have grown by 7.3% last year, slowing from 7.7% in 2013, according to the median result in a survey of 15 economists by AFP. These respondents also expected fourth quarter growth of 7.2%, down from 7.3% in the previous three-month period. Chinese authorities attribute the cool-down to structural economic adjustments, using the phrase “new normal” to describe the deceleration. Nevertheless, Beijing has taken steps over recent months aimed at shoring up slack in the economy, including a surprise interest rate cut in November.

China Dec Bank Loans Post Big Miss, Reliance on Credit Losing its Potency (Reuters, Jan 15) Despite encouragement from China’s central bank to expand credit access, new yuan lending totaled just 697.3 billion yuan in December, down from 852.7 billion yuan in November. Analysts say concerns about slowing economic growth and the possibility of deflation are putting the brakes on commercial lending. Still, demand for credit appeared strong, at least as evidenced by an upswing in shadow banking activity. Total social financing, a measure of liquidity that includes some forms of off-balance sheet lending, rose to 1.69 trillion yuan last month; up from 1.15 trillion yuan in November. 

China’s Global Investment Set to Pass Inward Flows as Economy Cools (Reuters, Jan 16) According to information from Chinese commerce authorities, outbound direct investment from China rose 14.1% in 2014 to a record $102.9 billion, moderating slightly from the 16.8% increase recorded in 2013. Meanwhile, foreign direct investment totaled $119.56 billion, up 1.7% on an annual basis but easing from the 5.3% growth pace notched in 2013. Chinese investment into the European Union and the US reportedly jumped by 170% and 23.9% respectively last year. ODI into service sector targets is said to have expanded 27.1%, while mining sector investments contracted by 4.1%.

China Stocks Sink Most Since 2009 on Margin-Trading Suspensions (Bloomberg, Jan 19) The Shanghai Composite Index fell more than 6.5% in early trading Monday after Citic Securities, Haitong Securities and Goutai Securities were slapped with a three-month ban on money and stock lending to new clients. Nine other brokerages were also reportedly punished for allowing unqualified investors to engage in margin-trading. As of January 13, outstanding loans to margin traders totaled 1.08 trillion yuan, up from 400 billion yuan by the end of June.

RELATED: China Issues Draft Rules Restricting Entrusted Lending (Reuters, Jan 18) The China Banking Regulatory Commission has issued tentative rules to restrict borrowing between companies through banking intermediaries. Such practices have reportedly opened a channel for margin lending outside of the brokerage industry.

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