China’s economic growth at lowest level in three decades amid bitter trade war with US

World's second-largest economy official growth came in at 6.6 per cent in 2018, stoking fears about impact on global economy

Toyin Owoseje
Monday 21 January 2019 11:40
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China’s economy grew at its slowest pace in almost three decades last year, confirming a slowdown in the world’s second largest economy.

Economic growth in China expanded by 6.6 per cent in 2018, down from 2017’s 6.9 per cent, according to official data.

In the three months to December, GDP figures dipped to 6.4 per cent from the previous quarter’s 6.5 per cent making it the lowest quarterly level since the 2008 global crisis.

It was also the lowest since 1990’s 3.9 per cent in the aftermath of the violent crackdown on pro-democracy protests centred on Beijing’s Tiananmen Square.

The figures indicate a modest downshift from earlier levels, suggesting China’s economy is slowing.

The National Bureau of Statistics also revealed that growth in investment, retail spending and factory activity also declined.

The country’s weak annual performance, while in line with expectations, is now adding to pressure on Beijing to settle its trade war with the United States amid concerns the slump could threaten global growth.

The two sides have imposed tariff hikes of up to 25 per cent on tens of billions of dollars of each other’s goods in the fight over US complaints China steals or pressures companies to hand over technology.

Washington is pressing China to roll back plans for state-led industry development its trading partners say violate its market-opening obligations.

Louis Kuijs of Oxford Economics said: “Growth will remain under pressure. Key risks are the ongoing trade tension with the US and that credit growth does not recover.”

Exports held up through most of 2018 despite US president Donald Trump‘s tariff hikes on Chinese imports in a fight over Beijing’s technology ambitions. But they contracted in December as the penalties began to depress US demand.

President Trump said on Saturday there has been progress toward a trade deal with China, but denied reports he was considering lifting tariffs.

“Things are going very well with China and with trade,” he told reporters at the White House.

Beijing announced on Friday its top trade envoy, vice premier Liu He, will visit Washington for talks 30-31 January.

Ning Jizhe, director of China’s National Statistic Bureau, said while China’s economy was facing downward pressure it remained “steady overall”.

“China-US conflict is indeed affecting China’s economy, that is true, but the impact is manageable,” Mr Ning said.

“The Chinese economy‘s resilience and ability to resist shocks and the long-term trend of stability will not change”.

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The latest data is seen as a useful indicator of the country’s growth trajectory and analysts now expect growth to decline further this year to 6.3 per cent or lower.

“A key downside risk to the Chinese growth outlook will be if the US-China trade war escalates, should the temporary truce expire without any trade deal being struck,” Rajiv Biswas of IHS Markit said.

With financial markets becoming more volatile and declining investment spending, China’s government has been pushing to shift away from export-led growth to depend more on domestic consumption.

Additional reporting by PA

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