China’s growth slowed further last year, adding to the troubling economic picture that is unsettling investors around the world.
The Chinese economy grew at a 6.8 percent pace in the fourth quarter, according to data released Tuesday. It was the lowest quarterly expansion since the global financial crisis in 2009.
Uncertainty about the Chinese economy — and whether the government can manage a slowdown — has weighed heavily on global markets in recent weeks. Investors, in part, are trying to determine if China’s slump will spread, dragging down the rest of the world.
The latest numbers are not likely to reassure investors that all is well in China, the world’s second-largest economy.
The quarterly growth rate was lower than analysts expected. For the full year, China’s expansion was 6.9 percent, just below the government’s target of 7 percent.
It is a pace that would be the envy of many developed countries. But the figure represented China’s slowest expansion since 1990, when foreign investment shriveled in the year after the government’s deadly crackdown on protesters in Tiananmen Square.
“Signs of growth bottoming out are nowhere to be seen,” said Li-Gang Liu, the chief economist for greater China at the Australia and New Zealand Banking Groups. “Instead, we will see at least another two years of further growth slowdown.”
However, Tuesday’s report contained signs of progress. Services businesses accounted for a record 50.5 percent of China’s economic activity last year, the first time its share has exceeded 50 percent. Services grew 8.3 percent last year, outpacing the traditional drivers of economic growth — manufacturing and construction — which together grew 6 percent.
After decades of double-digit growth, the Chinese economy is entering a new era of more muted growth. While the government’s leaders have said they are comfortable with this shift, the slowdown creates a host of unexpected challenges.
China’s growth is decelerating as its traditional industrial businesses struggle with excess capacity and dwindling demand. A slump in new housing construction is hurting consumption of building materials such as steel, cement and glass, even as home prices show signs of a rebound.
China’s export base in lower-end manufacturing, once a powerhouse that drove growth and created jobs, has been hollowed out. Factories churning out goods like garments and furniture are losing competitiveness because of lower wages in Southeast Asia and South Asia.
Although consumer spending and more innovative private-sector companies are expected to help China’s economy expand in the future, analysts worry that their development will be too slow to offset the current and painful industrial slowdown.
And the government’s response could add to the challenges. The government has rolled out a raft of stimulus measures. But that only threatens to leave already struggling companies even deeper in debt.
Taken collectively, China’s results could spell more trouble for global growth, even as the economy in the United States shows resilience.