Jan 20, 3:04 PM EST

China's economic growth slowed to 24-year low of 7.4 percent in 2014


AP Photo
AP Photo/Andy Wong
Business Video

Interactive
Made in China: Too Many Imports Too Soon?
Latest News
Alibaba promises more action against fake goods following public spat with Chinese regulator

China's yuan joins top 5 most-used currencies in global payments as controls gradually eased

China's economic growth slowed to 24-year low of 7.4 percent in 2014

US-made Ford Mustang is going global with first shipment to China

Latest Business News
Skittles candy, Carnival cruises, other 1st time advertisers bet big on Super Bowl

What slowing economy? US consumers show they're confident and eager to spend more

Lawsuit alleges exploding Takata air bag killed Texas man in crash involving Honda Accord

Exxon Mobil adds sexual orientation and gender identity to its anti-discrimination policy

How the Dow Jones industrial average and other major indexes fared Friday

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
What slowing economy? US consumers show they're confident and eager to spend more

US economy slowed to 2.6 pct. annual growth in Q4, but consumer spending is fastest since 2006

Russia cuts key interest rate to help economy, but depriving ruble of support

Prices in the 19 euro countries fall 0.6 percent annually in January as ECB readies stimulus

Factory data shows Japan economy turning corner on recession but inflation remains subdued

Fragile state of US consumer contrasts with stronger economy, studies show

German unemployment rises to 7 percent in January due to seasonal slowdown in labor market

Philippine official: Strong growth shows country is no longer 'sick man' of Asia

NYC economy lost about $200 million from fizzled storm, transit shutdown, expert says

Britain's economic growth rate falls at end of 2014, but remains among best in developed world

Multimedia
Video photo gallery on trash in China
China celebrates 60th year
Panorama of Tiananmen Square
Remembering Tiananmen
A year after China quake
Migrant laborers struggle to find work
Checking Beijing's Air
China's morning exercises in parks
Exploring Chinese Cuisine
Beijing Architecture Changes For Games
Woman Rescues Homeless Quake Dogs
China Holds Funeral for Panda
China's 1-child Policy Causes Extra Pain
Map of Earthquake Zone in Central China
Entrepreneurs Move Into, Out of China
Olypmics in Beijing Highlight China's Water Woes
Foreign Buyers Head to China Despite Problems
Coal Use Produces Pollution, Illness
Coal Means Profit, Woes for China
China Extending Its Reach Around the World
In China, the Desert Closes In
Latest News
China offers up to $50K in cash reward for terrorism-related tips in Tibet

Chinese MH370 relatives reject Malaysian conclusion that passengers of missing plane are dead

Myanmar opens deep sea port terminal for pipeline carrying Mideast oil to China

China education minister says Western values must be excluded from higher education curriculum

Philippines says ASEAN's credibility at stake over China's reclamation of disputed reefs

Buy AP Photo Reprints
Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt
Audio Slideshow
Panorama of Tiananmen Square
Remembering Tiananmen

HONG KONG (AP) -- The global economy, slowed by stagnation in Europe and Japan, is being further hampered by China's decelerating growth.

The Chinese economy grew 7.4 percent in 2014, its weakest performance in nearly a quarter-century. And its growth is forecast to slow even more over the next two years.

The figures released Tuesday remain, by just about any measure, impressive. China continues to grow at more than twice the pace of the overall world and about three times as fast as the U.S. economy. Yet its growth rate marks a sharp drop from China's sizzling double-digit expansion in previous years.

And given its size, China has an outsize effect on the world. China's share of the global economy climbed from 4.5 percent in 2000 to an estimated 11.3 percent last year, according to the World Bank.

"China is the second-largest economy in the world," said Paul Sheard, chief global economist at Standard & Poor's Ratings Services. "So when it slows, the rest of the world is impacted."

On Tuesday, the International Monetary Fund downgraded its forecast for the global economy for this year and next and pointed to China's slowing economy as a key factor. The IMF said China's growth would weaken to 6.8 percent this year and 6.3 percent in 2016. China's slowdown will dent growth in countries it imports from, especially in Asia, the report said.

China's 2014 expansion was its slowest since 1990, when growth tumbled to 3.8 percent - a result of economic sanctions imposed on China after its violent crackdown on the Tiananmen Square protests. Last year's 7.4 percent growth undershot Beijing's target of 7.5 percent, its first miss since 1998, according to analysts.

Economists expect the slowdown to deepen, clouding the outlook for the world economy as China transitions away from an era of supercharged but unsustainable growth that fueled demand for everything from Australian iron ore to European luxury goods.

Few think the Chinese slowdown will do much direct damage to the strengthening economy of the United States. The United States is enjoying sustained improvement, with healthy job growth, falling oil prices, rising auto sales, low interest rates and an easing of government cutbacks fueling steady expansion.

The pain will be more intense in countries such as Australia and Malaysia that rely heavily on the Chinese market, said Nariman Behravesh, chief economist at IHS.

"Those most hurt will be the commodity-exporting countries in Africa and Latin America and China's neighbors," Behravesh said.

Chinese businesses are bracing for a more painful year.

"Competition will be even more difficult," said Han Yi, a sales manager at Tianjin Yihsin Packing Plastic Co., which employs 700 people making plastic cups and cookie packaging in Tianjin, about an hour southeast of Beijing.

Han complained that sales in 2014 dipped about 5 percent from the year before and the company had to improve product quality and reliability to compete for new clients. Even then, it was able to win only one new account from a rapidly expanding customer.

"The situation would be much worse if we could not win this new client," he said.

China's slowdown is partly intentional: Beijing wants to move the country away from super-fast growth based on often-wasteful investment in factories and real estate to sturdier but slower growth based on spending by Chinese consumers.

The slowdown "is by and large a good thing," S&P's Sheard said. "China was growing at an unsustainably fast pace."

But the transition, already difficult because consumers have never been the driving force behind China's growth, has been buffeted by a range of problems. They include a slumping property market and uneven exports.

Some analysts expect China to gradually provide economic stimulus this year to prevent growth from fading too fast. But they don't expect a major spending splurge. Debt is already at worrying levels after the government engineered a credit-fueled response to the 2008 global crisis.

"Credit risks will likely continue to prevent policymakers from using monetary policy too aggressively in order to shore up growth," said Julian Evans-Pritchard of Capital Economics, who forecasts 7 percent growth in China this year.

Consumption should receive a boost from the slump in global oil prices. But it's unlikely to fully offset the slowdown of investment in areas already suffering from overcapacity such as property and heavy industry, he said.

Chinese officials have tried to lower expectations by saying growth below the official target would be acceptable.

President Xi Jinping said last year that the economy has entered a "new normal." But a surprise interest rate cut by policymakers in November indicated they were worried about a spike in job losses.

Growth in the fourth quarter of last year was 7.3 percent, unchanged from the previous quarter, which was the slowest quarterly expansion in five years. China's economy grew 7.7 percent in 2013.

Staff at the Wanjiang Xiufang garment company in Dongguan, southern Guangdong province, said they were battling competition from an increasing number of rival factories even as consumer spending on the women's and children's clothing they make weakened.

Average profit on a hoodie, for example, fell to 8 yuan ($1.29) last year, down from 10 yuan ($1.60 previously, said Lin Rongguang.

"We need to produce new products with better quality but a lower price," Lin said. "I know it will decrease our profit, but we have to survive first," he said.

---

Wiseman reported from Washington. AP researcher Fu Ting contributed.

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.