China posts weakest growth in 29 years as trade war bites, but ends year on firmer note

  • Economy
  • Friday, 17 Jan 2020

BEIJING: China's economic growth slowed to its weakest in nearly 30 years in 2019 amid a bruising trade war with the United States and sputtering investment, and more stimulus steps are expected this year to help avert a sharper slowdown.

Fourth-quarter gross domestic product (GDP) rose 6.0% from a year earlier, data from the National Bureau of Statistics showed on Friday, in line with expectations and steady from the pace in the third quarter.

That left full-year growth at 6.1%, the slowest rate of expansion China has seen since 1990. Analysts had expected it to cool from 6.6% in 2018 to 6.1%.

While recent data have pointed to some signs of improvement in the ailing manufacturing sector, and a newly-signed Sino-U.S. trade deal has helped revive business confidence, analysts are not sure if the gains can be sustained.

This year is crucial for the ruling Communist Party to fulfill its goal of doubling GDP and incomes in the decade to 2020, and turning China into a "moderately prosperous" nation.

Even with additional stimulus and the trade war truce, economists polled by Reuters expect growth will cool further this year to 5.9%.

Policy sources have told Reuters that Beijing plans to set a lower economic growth target of around 6% this year from last year's 6-6.5%, relying on increased infrastructure spending to ward off a sharper slowdown.

On a quarterly basis, the economy grew 1.5% in October-December from the previous three months, in line with expectations and also steadying.

December data released along with quarterly GDP showed a surprising acceleration in factory output and investment growth, while retail sales grew at a steady, solid pace, suggesting the economy ended the year on a firmer note.

Industrial output grew 6.9% in December from a year earlier, the strongest pace in nine months. Analysts had expected growth to dip to 5.9% from 6.2% in November.

Fixed-asset investment rose 5.4% for the full year, versus expectations for a 5.2% increase, the same as in the first 11 months of the year.

Retail sales rose 8.0% in December on-year, compared with forecasts for 7.8% and November's 8.0%.

Real estate investment rose 9.9% in 2019 from a year earlier, slowing slightly from a 10.2% gain in the first 11 months of the year.

Beijing has been relying on a mix of fiscal and monetary steps to weather the current downturn, cutting taxes and allowing local governments to sell huge amounts of bonds to fund infrastructure projects.

Banks also have been encouraged to lend more, especially to small firms, with new yuan loans hitting a record 16.81 trillion yuan ($2.44 trillion) in 2019. But the economy has been slow to respond, and investment growth has slid to record lows.- Reuters

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GDP , China , trade war


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