China’s 2018 growth slows to 28-year low
BEIJING – Reuters
China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown.
Fourth-quarter gross domestic product (GDP) grew at the slowest pace since the global financial crisis, easing to 6.4 percent on-year as expected from 6.5 percent in the third quarter, the National Bureau of Statistics said on Jan. 21.
That pulled full-year growth down to 6.6 percent, also as expected and the slowest annual pace since 1990. GDP in 2017 grew a revised 6.8 percent.
With support measures expected to take some time to kick in, most analysts believe conditions are likely to get worse before they get better, and see a further slowing to 6.3 percent this year.
Some China watchers believe actual growth is already weaker than official data suggest.
Despite a raft of support measures so far, December data released along with GDP showed continued weakness across broad areas of the economy at the end of last year.
Factory output picked up unexpectedly to 5.7 percent on-year from 5.4 percent, but it was one of the few bright spots, along with a stronger services sector.
Other data showed investment and retail sales continued to languish, while the jobless rate edged higher.
Fixed-asset investment rose 5.9 percent in 2018, the slowest in at least 22 years, as a government crackdown on riskier financing and debt weighed on local government construction early in the year.
Property investment, another key driver, is also looking wobbly, though many analysts doubt if Beijing will risk loosening restrictions on home buyers that have kept a potential housing bubble in check.
Growing signs of weakness in China, which has generated nearly a third of global growth in recent years, are fueling anxiety about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.
Policymakers have pledged more support this year to reduce the risk of massive job losses, but have ruled out a “flood” of stimulus like that which Beijing has relied on in the past, which quickly juiced growth rates but left a mountain of debt.
Chinese consumers are clearly feeling the pressure.
Though retail sales growth picked up marginally in December to 8.2 percent, the consumer strength gauge slipped last year to around the weakest in 15 years. Auto sales in the world’s biggest car market shrank for the first time since the 1990s.
Officials have recently pledged to boost consumer demand for big-ticket items from cars to appliances. But gains in disposable income are slowing, while household debt is on the rise.
Data in recent weeks showed exports and imports unexpectedly shrank last month, while falling factory orders point to a further drop in activity in coming months.
Demand is weakening globally, not just in the United States. Net exports actually dragged on China’s growth by 8.6 percent last year, Reuters calculations based on official data showed.
Trade negotiators are facing an early March deadline and Washington has threatened to sharply hike tariffs if there are no substantial signs of progress. White House officials have given markedly different views on areas of agreement so far.
Some factories in Guangdong - China’s export hub - have shut earlier than usual ahead of the long Lunar New Year holiday as the trade war curtails orders.