BEIJING: Weakness in the service and farm sectors slowed China’s economic growth in the fourth quarter, despite a strong pickup in construction activity, official data showed on Tuesday.
Services grew 7.4 per cent from a year earlier, slowing from 7.9 per cent in the third quarter, while growth in agriculture slowed to 3.5 per cent from 3.6 per cent, the National Bureau of Statistics (NBS) said.
The sector-by-sector breakdown follows release of headline GDP figures on Monday that showed China’s economy in the last quarter expanded at its slowest rate since the global financial crisis due to faltering domestic demand and an ongoing trade war with the United States.
The services sector accounted for almost half of gross domestic product in the quarter by value as China continued to transition towards a service-oriented economy, while agriculture contributed about 10 per cent, according to calculations based on the latest data.
Services suffered a broad-based slackening from real estate to tech, as these industries braced for more cautious investor lending and softer consumer demand.
Growth in real estate services slowed to 2 per cent year-on-year in the fourth quarter from 4.1 per cent a quarter earlier, as government tightening measures to curb speculation and skyrocketing prices subdued overall demand. The sector contributed 6.4 per cent to GDP in the quarter.
The retail and wholesale sector slowed to 5.5 per cent from 6.2 per cent as consumption of physical goods lost momentum. Auto sales in the world’s biggest car market shrank for the first time in 2018 since the 1990s.
Though retail sales growth picked up marginally in December to 8.2 per cent, the consumer strength gauge is around the weakest in 15 years.
“With consumer confidence now trending down and the labour market set to weaken further, we think households will turn even more cautious in the coming months, weighing on service sector growth,” Capital Economics wrote in a note on Tuesday after the data release.
Having been a stellar performer benefiting from supportive policies, the tech sector still grew at double-digit rate but growth slowed to 29.1 per cent in the fourth quarter compared with 32.8 per cent in the third. It accounted for about 3 per cent of GDP in the fourth quarter.
As fears for a sharp slowdown mounted amid uncertainties over whether the trade war will be brought to an end any time soon, Beijing has been drumming the message that it has plenty of room to deploy measures to spur economic growth.
Finance was one of the few bright spots in the service sector thanks to recent government stimulus measures to keep liquidity ample. — Reuters
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