Economic data move toward new normal

The economic data of Jan 20 showed that, on a quarterly basis, the slowdown of China's economy was interrupted in the fourth quarter of 2014. However, for the year as a whole, GDP growth slowed from 7.7 percent in 2013 to 7.4 percent last year, slightly below the official target of 7.5 percent, the first time this has happened since 1990.

The economic slowdown was especially visible in industry, particularly heavy industry, which was jolted by the real estate downturn and where the impact of the slowdown on corporate activity and profits is amplified by falling output prices.

Activity and price developments in light industry and the service sector were more favorable. Indeed, we (at Royal Bank of Scotland) saw further rebalancing of the pattern of growth in 2014. As the share of the secondary (industrial) sector fell 1.3 percentage points to 42.6 percent of GDP, the service sector's share increased 2.1 percentage points to 48.2 percent, even though the rebalancing on this dimension was less rapid in real terms.