BEIJING: China’s economy grew at its slowest pace in almost three decades in 2018, analysts in a poll said, as the government struggles to contain ballooning debt and a bruising trade war with the United States.
And in a sign of the battle Beijing faces in getting things back on track, the survey of 13 economists also forecast expansion in the last three months to be at its weakest since the global financial crisis 10 years ago.
The figures are the latest in a long-running trend that have prompted officials to vow they will not let the economy “fall off a cliff” and announce support measures including tax cuts and making it easier for banks to lend.
The full-year figure of 6.6 per cent would be the worst since 1990, when the economy was hit by outrage over the Tiananmen Square crackdown a year earlier.
The October-December rate of 6.4 per cent marks the slowest quarter since 2009 and indicates China faces a tough year ahead.
“Economic momentum is clearly slowing,” said Raymond Yeung, economist at ANZ bank.
Economists in China and abroad have long suspected data is massaged upward, often noting that full-year gross domestic product hits Beijing’s pre-set targets with suspicious regularity.
A widely respected global business think-tank, the US-based Conference Board, says its methodology indicates growth of 4.1 per cent for the year.
Relations with top trading partner the United States deteriorated sharply last year after President Donald Trump hit roughly half of Chinese imports with new tariffs in an attempt to force trade concessions from Beijing.
The trade war with the US is on hold for now after President Xi Jinping and Donald Trump agreed a three-month ceasefire while the two sides try to find a resolution.
China’s top negotiator is heading to Washington for talks this month ahead of a March deadline to avoid further tariff hikes, while a report said the US is considering lifting some levies in return for reforms by Beijing.
While analysts say the standoff has dented confidence — leaving the stock markets battered and the yuan weakened — they attribute most the downturn to government policies to tackle growing debt, financial risk and pollution.
The 2018 growth forecast is above the official target of around 6.5 per cent but down from the 6.8 per cent chalked up in the year before — after officials on Friday revised down the 2017 figure. The National Bureau of Statistics will release its official results on Monday.
After halting some major infrastructure projects such as subway lines and motorways in the first half of the year to keep a lid on debt, policymakers gradually eased up and encouraged more infrastructure spending in the autumn.
“The squeeze on shadow financing activity took a particularly heavy toll on infrastructure investment,” economists at Fitch Ratings wrote in a report, referring to off-the-books loans.
Analysts say the credit tightening also made loans harder to come by for some would-be car buyers, which contributed to annual car sales falling for the first time in more than 20 years.
It is one of a raft of recent economic indicators that point to a deepening slowdown. Imports and exports fell in December while the manufacturing sector contracted for the first time in more than two years.
Chinese officials have announced tax cuts, fee reductions, and cutting red tape, among other measures to stimulate the economy. — AFP
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