China has reported its weakest economic growth for almost three decades as it battles a series of challenges including its trade war with the United States.
The world’s second largest economy said output was 6.1% higher during 2019 – the lowest level since 1990 – down from 6.6% in the previous 12 months.
The fourth-quarter figure came in as expected at 6% as it was not until December that Beijing and Washington agreed a so-called phase one deal, signed this week, to ease trade tensions.
Economists believe Chinese consumer and business sentiment will pick up – aided by the likelihood of further stimulus from China’s central bank – as talks begin to end hostilities completely following 18 months of tit-for-tat tariffs on goods worth hundreds of billions of dollars.
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Donald Trump’s protectionist push is aimed at giving US industry a more level playing field.
The phase one deal means his government has agreed to cancel planned tariff hikes on additional Chinese imports while it sees Beijing commit to buying more American farm goods.
However, the punitive duties already imposed by both sides remain in place for now.
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The trade war has dented global demand – and China’s massive export model in the process.
That has hit jobs across China’s huge manufacturing sector with things such as car sales tumbling – by almost 10% on 2018. Retail sales growth slowed to 8%.
Image: Chinese-made cars are readied for export as auto sales in the country fall sharply
Consumer sentiment has also been damaged by surging food costs.
Pork prices were more than 40% up in the year as a consequence of a devastating swine fever outbreak in the country’s pig population, forcing millions of the animals to be killed.
That helped propel overall food inflation to 7%.
Swine flu wipes out third of China’s pig population
The International Monetary Fund expects economic growth this year to come in at 5.8%.
The government has been spending money, on infrastructure projects especially, while the central bank has lowered borrowing costs and extended credit as part of efforts to shore up activity.
Economists suggest that a big stimulus programme has been avoided only because of concerns around the country’s huge debt pile.
They placed confidence in the fact China had targeted new markets to help offset weaker sales with the US.
Commenting on the Chinese government figures, Louis Kuijs, of Oxford Economics in Hong Kong, said he thought the current level of growth was sustainable.
“We have seen improvement in industry. We have seen efforts to make sure the economy continues to grow, especially efforts in the financing of infrastructure.”
Source : Sky News