CFR Update 1/20 Chinese Growth Slows to Twenty-Four Year Low

Top of the Agenda Chinese Growth Slows to Twenty-Four Year Low China’s economy grew by 7.4 percent in 2014, missing the official growth target for the first time since 1998 and expanding at the slowest pace (Reuters) in twenty-four years, according to government data released on Tuesday. Policymakers blamed a slowdown in the housing sector, where the investment growth rate fell by half (FT), as well as high debt and weak external demand. Fearing a potential deflationary spiral, global financial institutions have downgraded their economic projections, with the IMF forecasting that China’s growth will further slow (WSJ) to 6.8 percent in 2015, pulling down global growth (BBC) from 3.8 to 3.5 percent in the coming year.  The World Bank also said that falling investment in China could reduce global growth by up to 0.5 percent. Analysis "The best way to sustain China’s economic transition and prevent a hard landing is to implement looser monetary and credit policies that enable the most productive cities, companies, and industries to generate new added value. With the risks of inflation and asset bubbles being mitigated by lower oil prices and excess capacity, now is a good time to initiate this policy shift," write Andrew Sheng and Xiao Geng for Project Syndicate. "Fortunately, buried within today's GDP numbers are others that suggest Chinese leaders should be able to withstand the slowdown the IMF is predicting. Most importantly, China's Gini coefficient, a measure of a nation's rich-poor gap, dropped for the sixth straight year—a telltale sign that the benefits of growth are spreading more widely," writes William Pesek in Boomberg View. "In this respect it is encouraging that China missed its 2014 growth target. The message from the top of the government is that growth is not as big a priority as in the past. It is a message reinforced by the constant repetition of President Xi Jinping’s favourite slogan for describing the economy, the'new normal'," writes the Economist. PACIFIC RIM Australia Raises Terror Threat Level The Australian Federal Police raised (Australian) the national terrorism threat level to "high" on Tuesday, citing recent attacks on police and soldiers in Canada and France. SOUTH AND CENTRAL ASIA IMF Predicts Indian Growth to Surpass China's In a report released on Tuesday, the IMF projected that the Indian economy will grow (Mint) by 6.5 percent in 2016–2017, more than China's forecast of 6.3 percent. Christine Lagarde, managing director of the IMF, discussed the global economy and the IMF’s role in 2015 at this CFR Event. AFGHANISTAN: President Ashraf Ghani introduced (TOLO) his unity government's cabinet nominees of to the lower house of parliament for a vote of confidence on Tuesday.  MIDDLE EAST AND NORTH AFRICA ISIS Threatens Japanese Hostages A video posted online Tuesday, purportedly by ISIS, showed a masked man threatening (Japan Times) to kill two Japanese hostages within seventy-two hours unless the Japanese government paid a $200 million ransom. Japanese Prime Minister Shinzo Abe denounced the video and demanded the immediate release of the hostages. This CFR Backgrounder chronicles the rise of ISIS.   YEMEN: The president and Shia Houthi rebels held talks (AP) on Tuesday after the military and rebels reached a cease-fire. Violence erupted in Sana'a on Monday, in what some described as a coup attempt by the Houthi rebels, killing nine and injuring sixty-seven others.  SUB-SAHARAN AFRICA Zambians to Vote in Special Presidential Election Zambians voted (Herald) in a special presidential election on Tuesday following the death of former President Michael Sata in October. Edgar Lungu of the Sata's Patriotic Front party and Hakainde Hichilema of the United Party for National Development are frontrunners, in a field of eleven candidates. CENTRAL AFRICA REPUBLIC: A UN peacekeeping mission worker was kidnapped (Reuters) on Tuesday in Bangui, a day after armed men abducted a French charity worker and a cleric. The kidnappers, members of the anti-balaka militia, have demanded the release of one of their leaders who was arrested over the weekend.  EUROPE PM Says More Russian Troops in Ukraine Ukrainian Prime Minister Arseniy Yatsenyuk said that more Russian troops and equipment entered (CNN) the country, according to reports from Ukraine's state-run media. Meanwhile, fighting (Kyiv Post) for control of Donetsk's international airport continued over the weekend. EU: The European Union called for an anti-terror alliance (France 24) with Arab states to improve cooperation and intelligence sharing on Monday following a meeting between foreign ministers of EU member states in the aftermath of the Paris attacks and counterterrorism arrests in Belgium last week.  AMERICAS Obama to Give Sixth State of the Union U.S. President Barack Obama will give his sixth state of the union (WaPo) address on Tuesday before a joint session of Congress. Tax policy, education, and cybersecurity are expected to be among the president's chief issues. This CFR Issue Guide offers analysis on foreign policy issues likely to figure heavily in the president's address. ARGENTINA: Prosecutor Alberto Nisman was found dead (LAHT) on Sunday night, hours before he was scheduled to testify on his allegations against Argentine President Cristina Fernandez de Kirchner. The chief investigator on a 1994 terrorist attack that killed eighty-five people at a Buenos Aires Jewish center, he had claimed that Kirchner's government had conspired to cover up Iran's involvement in the attack. CFR's Elliott Abrams unpacks the surprising death of Nisman and why it matters in this blog post.  Connect with CFR Facebook Twitter YouTube Mobile Join the conversation at cfr.org/blogs»