China’s economy last year grew at its slowest pace in almost three decades, losing more steam in the final quarter as it battles a massive debt pile and a trade dispute with the US, official data showed yesterday.
The 6.6 percent growth came in above the official target of about 6.5 percent and matched a forecast by analysts polled by Agence-France Presse, but is down from the 6.8 percent it posted in 2017, according to the Chinese National Bureau of Statistics (NBS).
In a sign of the struggle Beijing faces, growth in the last three months of the year fell to 6.4 percent, matching a low seen during the global financial crisis 10 years ago, with economists widely expecting the slowdown to deepen.
Photo: EPA-EFE
“Everyone is widely concerned about the direction of the international situation where there are many variables and uncertain factors,” NBS Commissioner Ning Jizhe (寧吉喆) said, including rising trade protectionism.
“For the world’s second-largest economy, where trade accounts for one-third of GDP, this has an impact,” Ning said, adding that “downward pressure” on the economy has increased.
The escalating trade dispute with the US is temporarily on hold after Chinese President Xi Jinping (習近平) and US President Donald Trump agreed to a three-month ceasefire, with top negotiators to meet in Washington at the end of the month as a March deadline for a deal looms large.
“China-US economic and trade frictions do indeed affect the economy, but the impact is generally controllable,” Ning said.
While analysts have said the standoff has dented confidence — leaving stock markets battered and the yuan weakened — they attribute most of the downturn to government policies to tackle growing debt, financial risk and pollution.
China hit the brakes on major projects, such as metro lines and motorways, to keep a lid on debt last year, with infrastructure investment rising by just 3.8 percent, down from 19 percent in 2017.
China’s exports to US and the world also fell last month, reinforcing the need for its legions of domestic consumers to fuel the economy.
Fourth-quarter GDP growth slowed as expected, Nomura Holdings Inc China economist Lu Ting (陸挺) said in a note, adding: “But the worst is yet to come.”
Overall credit growth decelerated every month last year. Slowing disposable income growth and tighter credit have hit consumer spending, with car sales falling last year for the first time in more than 20 years.
Retail sales growth slowed to 9 percent, down from a 10.2 percent increase in 2017. Last month, sales grew 8.2 percent.
Output at factories and workshops ticked up 6.2 percent last year, down from 6.6 percent in 2017.
Chinese officials have said that they would not resort to large-scale stimulus, as they did during the financial crisis, to fuel growth, instead laying out policies like lower taxes and fees, and less red tape to drive consumption.
However, the official figures could be painting an overly rosy picture, analysts said.
Economists in China and abroad have long suspected that data is massaged upward, often saying that full-year GDP hits Beijing’s preset targets with suspicious regularity.
“China’s GDP number is not an accurate gauge of economic growth,” Australia and New Zealand Banking Group economist Raymond Yeung (楊宇霆) said.
The US-based Conference Board said that its methodology indicates growth of 4.1 percent for last year.
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