China’s economy expanded 7.4% from a year earlier in 2014, the slowest pace in 24 years as the country’s growth has entered a phase of “new normal,” the National Bureau of Statistics (NBS) said. However, analysts said the fourth-quarter performance turned out to be better than expected, and they expected growth to be at a stable level in the coming months. China’s gross domestic product amounted to CNY63.6 trillion last year, strengthening its position as the world’s second-largest economy. Growth was led by the service sector, which gained 8.1% to CNY30.7 trillion. Manufacturing added 7.3% to 27.1 trillion, while agriculture rose 4.1% to CNY5.8 trillion. The economy grew 7.3% in the fourth and third quarters, after a rise of 7.5% in the second and 7.4% in the first. “The rate of 7.4% is hard earned and is within a reasonable range. The growth target also needs to be adapted to the new normal when the country is changing growth gears,” NBS Director Ma Jiantang said. He added that growth was accompanied by an inflation rate of 2% last year and stable employment. In 2014, China created 13.22 million new jobs, surpassing the full-year target of 10 million and taking the working population to 772 million, 2.76 million more than in 2013. Fixed-asset investment (FAI) grew 15.7% to 50.2 trillion in 2014, and retail sales accelerated 12% to CNY26.2 trillion last year with online spending surging 49.7% to CNY2.7 trillion. Chinese authorities are expected to set a growth rate of around 7% for 2015, the Shanghai Daily reports.

China’s consumption is on track to replace investment as the main engine of economic growth, making a long-promised rebalancing of the economy a reality. Dubbed the “third engine” of the economy, consumption contributed 51.2% to gross domestic product (GDP) growth in 2014, up from 48.2% a year ago. “China’s consumption on average is expected to outpace investment and GDP with a growth of 7% to 8% in real terms in the next few years,” Wang Tao, Chief China Economist at UBS told the South China Morning Post. Total retail sales were CNY26.2 trillion in 2014, up 11.9% in nominal terms. Car sales were up 6.1% year-on-year from 2% previously and purchases of household appliances accelerated by 12.6% in December versus a year ago. Debt and deflation are the two biggest risks facing the Chinese economy and may take years to resolve as a slowdown looms, according to Peking University Professor Michael Pettis. Yu Yongding, Professor at the Chinese Academy of Social Sciences (CASS) thinks it could take five years to eliminate the economy’s excess capacity.

The vibrant merger and acquisition (M&A) activities in China last year are set to continue in 2015 as several state-owned enterprises (SOEs) are likely to restructure. China saw 1,536 M&A deals worth USD339.7 billion, a surge of 73.9% from a year earlier, in 2014, financial data provider Mergermarket said in a report. Large-scale deals of over USD2 billion involving SOEs amounted to USD102 billion in 2014, taking up 30% of the total deal value. The top-three deals last year involved CITIC Group, Sinopec Marketing Co, and CSR as well as China CNR. Chinese companies were again the main driver of the Asian M&A market, excluding Japan, last year as they contributed 80.7% of the growth in deal value. Foreign investors’ M&As hit a record high last year with the inbound value surging 79.9% year-on-year to USD38.2 billion. Outbound M&A deals by Chinese companies dropped 14.6% to USD59.1 billion after reaching a high of USD69.1 billion in 2013.

China CSR Corp reported net profits of CNY5.74 billion in the first 10 months of 2014, up from CNY5.07 billion in the previous full year, while China CNR Corp said net profits hit CNY4.57 billion in the January-October period, versus CNY4.23 billion in all of 2013. The two firms said they got board approvals for their merger plan and would convene shareholders’ meetings on March 9. An independent financial advisor said in a report filed to the stock exchange that after the merger, the new company would have total assets of CNY305 billion, and its debt to asset ratio was 67% as of October 2014. The firm would have a revenue of CNY167.4 billion and net profit of CNY10 billion in the first ten months of 2014.

The value and volume of new home sales in China fell in 2014 from a year earlier. The value of new homes sold dropped 7.8% from 2013 to CNY6.24 trillion, while by volume, 1.05 billion square meters of new houses were sold last year, a year-on-year drop of 9.1%. According to a report by the National Statistics Bureau (NBS), house prices across the country declined by a slower pace in December amid improved sentiment among buyers. The four first-tier cities, in particular, posted an average price rebound from a month ago in both new and existing home markets. The buying of commodity properties, covering all types of real estate, totaled 1.2 billion square meters worth CNY7.6 trillion last year, down 7.6% and 6.3%, respectively, from 2013.

China’s property investment grew 10.5% last year, down from the 19.8% rise in 2013, and record high housing inventories will likely weigh down the real estate sector this year, exacerbating a slowdown in the wider economy that saw gross domestic product (GDP) grow at its slowest pace in 24 years. Property investment directly accounted for 14.9% of China’s GDP last year, down from 15.1% in 2013. “It will not be a surprise to see property investment slow to single-digit growth this year as the industry is suffering serious overcapacity due to explosive expansion in the past few years,” said Qi Jingmei, Senior Researcher at the State Information Center (SIC). China had a record stockpile of 621.69 million square meters of unsold property by the end of last year, when full-year property sales fell 7.6% to 1.2 billion sq m. Property sales revenue dropped 6.3% last year to CNY7.6 billion, compared with a rise of 26.3% in 2013. Many small developers could face bankruptcy. Despite some signs of a recovery from the downturn, developers and investors are concerned about how deeply President Xi Jinping’s anti-corruption drive will impact the industry. But Zhu Zhixin, Deputy Director of the National Development and Reform Commission (NDRC), dismissed concerns about a property market crisis, the South China Morning Post reports.