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China growth slowest for almost 30 years

23 January, 2019, 10:10 | Author: Lawrence Cooper
  • Economic activity suffered a sharp drop in the fourth quarter of last year

BEIJING: China's economy grew at its slowest pace in nearly three decades in 2018, losing more steam in the last quarter as it battles a massive debt pile and a U.S. trade war, official data showed Monday.

China's economy expanded by 6.6 percent past year, according to official data.

Gross domestic product rose 6.4 per cent in the fourth quarter from a year earlier, matching economists' estimates, and compared with 6.5 per cent in the previous three-month period.

Growing signs of weakness in China - which has generated almost a third of global growth in the past decade - are stoking worries about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.

Last July, a top political advisory body warned that China's labor supply will fall by 100 million every 15 years after 2020, urging the government to enact more incentives for having children.

Last December China's exports fell to United States dollars 221.5 billion registering biggest plunge in two years amid the trade war with US. For 2018 as a whole the country's GDP expanded by 6.6%, which was the lowest rate since 1990.

Trade negotiators are facing an early March deadline and Washington has threatened to sharply hike tariffs on Chinese goods if there are no substantial signs of compromise from Beijing.

Growth in investment, retail spending and factory activity all declined, though analysts pointed to a flicker of improvement in manufacturing in December.

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Communist leaders are trying to steer China to slower, more self-sustaining growth based on consumer spending instead of trade and investment. "There may be some more uneven growth along the way, but the hi-tech industries, the high value-added ones, also have the advantage of being relatively less credit dependent than the older industries which have become the zombie companies of today", said Mann.

The number of people aged over 60 now constitute 17.9% of the Chinese population, adding to its demographic challenges and fuelling fears that the country might be headed towards economic stagnation like Japan.

China's economy is closely watched internationally, as many worldwide corporations consider it a key market in reaching their own growth targets.

Most analysts polled by Reuters at the beginning of this year believe the yuan will weaken below 7 within six months.

This decline, which follows trends seen in other East Asian countries after decades of urbanization and development, comes despite efforts to encourage couples to have more children, including the relaxation in 2016 of population controls.

Trump said Saturday that trade relations with China were "going very well" and "a deal could very well happen".

Meantime, a downturn in iPhone sales in China has hurt Apple Inc.'s share price this month and raised question marks over whether the consumer can keep cushioning the economy's re-balancing. The People's Bank of China has been quietly guiding interbank borrowing costs down without actually cutting official interest rates, and the fiscal authorities have pressed on with tax cuts and expedited government bond sales, among other policies.

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