China posts weakest growth in 29 years as U.S. trade war bites

Marco Green
January 17, 2020

China's economy grew by just 6.1% past year, a sign that the trade war with the US has taken a toll.

The NBS data also showed China's economy grew 6.1 per cent year on year in 2019, within the government's annual target of 6 to 6.5 per cent.

Despite a "phase-one" deal reached between Beijing and Washington on Wednesday, which will see the US 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.

China's economy was weighed down by USA tariffs, high levels of food inflation, wavering confidence due to political unrest in Hong Kong, weak consumer spending, and rising unemployment.

Analysts had expected it to cool from 6.6% in 2018 to 6.1%. Yet China's economy remains clouded by so much opacity and state-involvement that it remains hard to know how accurate the economic figures are. Economists see the growth target for 2020 being set at "about 6 per cent", signaling an acceptance of the long-term slowdown that the nation is on.

In 2019, there were 10.48 births per 1,000 people, the lowest birth rate since 1949, the year the PRC was founded.

More recent data, along with optimism over a Phase 1 US-China trade deal signed on Wednesday, have raised hopes that the economy may be bottoming out.

"It showed that the quality of China's economic development is improving", Ning said, adding that "China's pace of progress is unstoppable". Japan had an even lower rate than China, with 8 per thousand. Any more weakness, or signs of recovery, could affect the pace and scope of further stimulus measures expected from Beijing this year.

China's GDP, worth an estimated $14.4 trillion, is second in size only to the U.S. Its economy has been undergoing a painful shift away from heavy industry and commodities.

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. The US central bank, for example, has forecast that the American economy will grow by around 2.2 per cent this year.

Containing financial system risks will remain a high priority for policymakers this year. The slower growth in real incomes was partly due to higher inflation, according to Ning, who said he expects personal income and consumption to continue growing this year.

Other reports by Click Lancashire

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