BEIJING: China’s economy weakened to its slowest pace in three decades last year as weaker domestic demand and trade tensions with the United States took their toll, official data showed Friday (Jan 17).
The world’s second-largest economy grew 6.1 per cent in 2019, the slowest in 29 years but still within the government’s target of 6 to 6.5 per cent. Analysts had expected it to expand 6.1 per cent, down from 6.6per cent in 2018.
While China’s economy had been gradually losing steam over the first three quarters, growth stabilised at 6 per cent in the last three months of 2019 – the same pace as in the third quarter, according to the National Bureau of Statistics (NBS).
Facing sluggish demand at home and abroad and US trade pressure, Chinese policymakers have been rolling out a stream of growth-boosting measures over the past two years, while trying to contain financial and debt risks.
READ: China set to post weakest growth in 29 years as trade war bites, investment sputters
Ning Jizhe, commissioner of China’s NBS, said China’s economy generally sustained a stable momentum of growth in 2019.
“However, we should also be aware that the global economic and trade growth is slowing down,” he said at a news conference.
He added that there were more sources of instability and risk, with the economy facing “mounting downward pressure”.
The figures were released after a truce was reached in the nearly two-year-old trade war, as President Donald Trump and Chinese Vice Premier Liu He signed a “phase one” agreement on Wednesday.
The mini-deal includes a pledge by China to purchase US$200 billion worth of US goods over two years.
In return, the US has pledged to slash in half some of the tariffs imposed on China, but levies remain in place on two-thirds of more than US$500 billion in imports from the Asian country.
READ: US-China trade deal basis for countries to work together, but differences remain: Chan Chun Sing
The World Bank said in a report this month that weakening exports in China had compounded the impact of its ongoing slowdown in domestic demand.
Policy uncertainty and higher tariffs on exports to the US also cast a pall on manufacturing activity and investor sentiment, it added.
The latest data showed that China’s industrial production grew by 5.7 per cent last year, down from 6.2 per cent in 2018.
Retail sales growth came in at 8 per cent, down from 9 per cent in the year before.
In December, sales grew 8 per cent, and the NBS noted that online retail sales in particular had a strong showing.
But analysts note that China’s slowdown is structural, as it becomes a more developed economy and faces demographic challenges such as a shrinking number of people of working age.
Louis Kuijs, head of Asia economics at Oxford Economics, told AFP that Beijing considers such a slowdown part of a “new normal”.
He added that major policy easing is unlikely as well, given the improvement in external outlook after the phase one trade deal and other signs of stabilisation.
He noted that Beijing likely wants to keep its powder dry, with policymakers aiming for a stabilisation rather than pick-up in growth.
“What they don’t want to see is a too-rapid slowdown,” he said.