Global Economics Monthly: A Deeper Assessment of China's 2014 Growth

Earlier this month, China reported 7.4 percent GDP growth for 2014, missing Premier Li Keqiang’s 7.5 percent target but still defying predictions of inevitable deeper slowing. With an additional $800 billion in annual output, China joined the United States as only the second member of the 14-digit club—at $10.4 trillion in headline GDP—drawing China closer to peer competition with the United States despite a year of painful economic restructuring, harrowing political showdowns at home, and an external environment fraught with geopolitical risk and economic fragility.

Growth in services was 8.1 percent, outstripping overall GDP growth and suggesting that the Chinese leadership can point to some progress in its effort to foster a rebalancing of activity in less over-capacity directions. Partly overshadowing that achievement are concerns about the sustainability of reform in 2015 and, based on a deep dig beneath the headline numbers, whether Beijing’s statistical practices are introducing new reasons for skepticism...