China economy grows in 2019 but with slowest pace in three decades

Marco Green
January 17, 2020

China's economy weakened to its slowest pace in three decades in 2019 as weaker domestic demand and trade tensions with the United States took their toll, official data showed Friday.

The impact of the trade row between Washington and Beijing past year is likely to show up in China's official 2019 economic data, set to be released at 0200 GMT.

The latest data showed that China's industrial production grew by 5.7 per cent past year, down from 6.2 per cent in 2018. Growth in the last quarter of 2019 equaled the 6.0% logged in the July-September period.

It comes after nearly two years of trade tensions with the U.S. - although hopes of a better relationship with America have seen improvements in manufacturing and business confidence data.

"These include rising unemployment, depressed consumer spending and private investment and growing financial risks as the deleveraging and de-risking campaign enters a critical phase among increasing stress in the financial system", Choyleva added.

"The next big move for crude may need to come (from) an improving global outlook that may require further stimulus from Europe", where growth has been less than stellar, said Edward Moya senior market analyst at OANDA. The Trump administration agreed to cancel planned tariff hikes on additional Chinese imports and Beijing promised to buy more American farm goods, though punitive duties already imposed by both sides stayed in place.

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

Despite a "phase-one" deal reached between Beijing and Washington on Wednesday, which will see the USA lower tariffs on $120 billion of Chinese goods in return for Beijing buying $40 billion worth of American farm goods, economists remained downbeat on China's growth outlook this year.

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

Industrial output grew 6.9% from a year earlier, the strongest pace in nine months, while retail sales rose 8.0%.

Property investment growth hit a two-year low in December even as it grew at a solid 9.9% pace in 2019. Fixed-asset investment rose 5.4% for the full year, but growth had plumbed record lows in autumn.

In December, sales grew 8.0 per cent, and the NBS noted that online retail sales in particular had a strong showing.

The government has used a combination of measures aimed at easing the slowdown, including tax cuts and allowing local governments to sell large amounts of bonds to fund their infrastructure programmes.

The country's banks have also been encouraged to lend more, especially to small firms.

So far the economy has been slow to pick up, with investment growth falling to record low levels.

Other reports by Click Lancashire

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