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China's economy grew 6.6% in 2018, slowest rate in 28 years

China's economy grew 6.6% in 2018, slowest rate in 28 years

Data suggests China's economy, the world's second biggest and a key driver of global growth, is beginning to feel the pinch from the US trade war. (File photo: AFP/STR)

BEIJING: China's economy grew at its slowest rate in almost three decades in 2018 and lost more steam in the last quarter of the year, official data showed on Monday (Jan 21), amid a debt battle and a United States (US) trade war.

The world's second-largest economy posted 6.6 per cent growth last year and 6.4 per cent in the October-December period - in line with a forecast by analysts surveyed by AFP - according to the National Bureau of Statistics.

This marks a cooling in the economy from a revised 6.8 per cent growth in 2017.

The government had set a 2018 growth target of around 6.5 per cent.

READ: From Mao to Xi - China's economic roller-coaster since 1949

The September-December growth rate was the weakest expansion since the financial crisis, adding to fears of a sharper slowdown in global growth.

On a quarterly basis, gross domestic product rose 1.5 per cent in Oct-Dec, compared with 1.6 per cent in the previous three months. Analysts had expected 1.5 per cent.

READ: Asian markets post fresh gains as China growth slows to 28-year low

Chinese policymakers are expected to ramp up support for the economy this year to avert a sharper slowdown but analysts say economic activity may not stabilise until summer, adding pressure on Beijing to strike a deal with Washington to end their trade war.

China has ample room for macro policy support, Ning Jizhe, head of the National Bureau of Statistics said.

He added that China has confidence and the capacity to achieve reasonable growth this year, and the slowing economy has shown some signs of stabilisation over the past two months.

TRADE WAR IMPACT MANAGEABLE

Ning also said that while the China-US trade war has affected China's economy, the impact on growth is manageable.

Net exports were an 8.6 per cent drag on economic growth last year, Reuters calculations based on official data showed.

Final consumption accounted for 76.2 per cent of China's economic growth in 2018, while capital formation accounted for 32.4 per cent of growth, the National Bureau of Statistics said.

Those numbers compare to shared proportions of 58.8 per cent for consumption and 32.1 per cent for capital formation in 2017, when net exports provided a 9 per cent boost to growth.

China's survey-based jobless rate was 4.9 per cent at the end of December, slightly up from 4.8 percent in November.

The economy created 13.61 million new jobs in 2018.

China will announce a series of measures to maintain stable employment this year as the economy slows, officials said in recent months.

Fixed-asset investment rose 5.9 per cent in 2018, missing expectations of a 6.0 per cent increase and the slowest annual growth since at least 1996., the statistics bureau said.

Private-sector fixed-asset investment, which accounts for about 60 per cent of overall investment in China, rose 8.7 per cent in 2018.

Industrial output grew 5.7 per cent in December from a year earlier.

Analysts polled by Reuters had expected industrial output would grow 5.3 per cent, slowing from 5.4 per cent in November.

Retail sales rose 8.2 per cent in December on-year, in line with a forecast rise of 8.2 per cent and up from November's 8.1 per cent gain.

Real estate investment in China rose 9.5 per cent in 2018 from a year earlier, slowing from a 9.7 per cent gain in the first 11 months of the year.

The property market, a key growth driver, has been cooling in recent months, adding to pressure on China's slowing economy. Further weakness, or signs of recovery, could impact the pace and scope of further stimulus measures expected from Beijing this year.

Property sales by floor area increased 1.3 per cent year-on-year in 2018, easing from a 1.4 per cent rise in January-November.

Source: AGENCIES/jt

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