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China Embraces 'New Normal' of Slower Growth

Workers walk out from a construction site at the Central Business District of Beijing, China, Jan. 20, 2015.

China says its economy grew by 7.4 percent in 2014, a robust rate most countries would envy. But China is not like most countries -- it has become the world’s factory and the second largest economy. Analysts say the lower figures are a sign that what Beijing calls "the new normal" is here to stay.

China’s National Bureau of Statistics says that in 2014 China’s economy grew by 7.4 percent, down from 7.7 percent in 2013.

That is the slowest pace of growth China has seen since 1990, when the country’s economy was struggling under the weight of sanctions after the brutal crackdown on pro-democracy protesters in Tiananmen Square.

Greater consumption

Chief economist at the Sydney-based AMP Capital, Shane Oliver, said many have been talking about a hard-landing in China over the past few years, though it seems the economy is still pretty well managed.

“It is the slowest rate in many years, since 1990, but it is a slowdown that is well and truly under the control of the government," said Oliver. "It is not due to a collapse in growth as the economy falls apart. It is just a managed slowdown and that I think is a positive sign.”

The Chinese economy has begun to slow in recent years from double-digit growth as authorities worked to move China’s economic focus away from an over-reliance on exports toward an economic model that is more driven by domestic consumption.

Following the Tiananmen Square protests, China has focused on economic growth to ensure domestic stability and to maintain one-party rule. But as its economy slows, there are concerns unemployment could rise -- and with it unrest.

Service sector

The head of China’s National Bureau of Statistics, Ma Jiantang, said one of the high-points of China’s economic performance last year was the growth of its service sector. He said it now accounts for nearly half the economy.

Ma said China’s economy saw steady advances in 2014 and continued to stabilize under what officials call "the new normal" of slower growth.

He said the domestic and international economic environment remains complex and the prospects for economic growth continue to be challenging and difficult.

China is struggling under the growing weight of local government and corporate debt, and while the government’s anti-corruption campaign is welcome, some analysts argue it has put a damper on consumption.

Also Tuesday, the International Monetary Fund adjusted its forecast for China’s growth for 2015 and 2016, saying it expects the country’s economic expansion to dip below 7 percent this year and to drop to 6.3 percent the following year.

VOA's Victor Beattie also contributed to this report.

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