The global stock market turbulence since the beginning of the year serves as yet another reminder of China's growing influence on the world economy. China, which emerged as a key engine of global growth after the 2008 collapse of Lehman Brothers triggered a worldwide recession, now poses a major risk to the world economy with its rapid slowdown. To fulfill its responsibility as the world's second-largest power, China needs to steadily implement structural reforms of its economy, a process that may be painful but is crucial for stable growth over the longer term.
The 6.9 percent increase of China's gross domestic product in 2015 over the previous year may indeed be "moderate but stable and sound" growth, as its National Bureau of Statistics put it in releasing the data this week. What was the slowest growth in 25 years since the 3.9 percent rate of 1990, when China was under international sanctions in the aftermath of the 1989 Tiananmen incident, is certainly within the range of the government's target of "around 7 percent" for the year. But the credibility of China's economic statistics itself is widely doubted, with some experts suggesting that its economic growth may in fact be around 5 percent.
What's clear is that China's investment-driven growth model is fast crumbling and a new one has yet to take hold. Investments in real estate development, which had expanded 10 to 30 percent annually over the decade to 2014, decelerated to a mere 1 percent growth due to the housing market slump. Fixed-asset investments, including capital spending by businesses, also slowed from a 15.7 percent rise in 2014 to a 10 percent increase. Exports fell 2.8 percent for the first year-on-year decline since 2009. Retail sales grew 10.7 percent but fell short of the 12 percent increase of 2014. The rise in consumer prices stood at 1.4 percent, less than half the government's forecast of 3 percent and the lowest since 2009.
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