China's growth slows to 28-year low as trade war weighs

Virginia Carson
January 23, 2019

Beijing has broadcast this for several years, that it's going to focus on the quality not quantity of growth.

"The government has means to support the economy".

Mann predicts that there is a possibility to see more interest rate and reserve ratio requirement cuts as it can keep providing liquidity to the market.

"While the government is putting policy responses in place, we anticipate that these will need to be ramped up over the course of the year", said Stephen Chang from Pacific Investment Management.

"But the problem lies in consumption. Until now, solid wage growth has been supporting consumption but now there appears to be a sense of vague anxiety about the future".

China's two-child policy implemented in 2016 has failed to make an impact on the country's low birth rate as the number of new-borns dropped by two million past year in the world's most populous nation, according to official figures released Monday.

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The reading was lower than the 6.8-percent growth registered in 2017. At the same time, the country's GDP growth slowed throughout the year from 6.8 percent year-on-year in the first quarter to 6.4 percent in the fourth quarter.

Some China watchers believe actual growth is already weaker than the official data suggests. "Makes so much sense for China to finally do a Real Deal, and stop playing around!" "China's economy is likely to weaken further before growth stabilises in the second half of the year". Industrial output grew 5.7 percent in December from a year earlier, beating expectations of 5.3 percent. Auto sales in the world's biggest vehicle market shrank for the first time since the 1990s. It has ruled out any return to the kind of massive stimulus package, based on government spending and the expansion of credit, that followed the 2008-2009 crisis because of concerns over the debt levels in the Chinese economy.

Resilience was also seen in the growing spending power of Chinese consumers.

He says the yuan's fundamentals do not justify its weakness and it was weak only because of the dollar's broad strength.

Auto sales, a key indicator for Chinese consumption, also dropped last year for the first time in nearly 30 years. There is a cyclical slowing down but there is also a structural slowdown that will come through the 2020s as a result of the demographic drag coming from rapid aging. The official jobless rate ticked up to 4.9% last month from 4.8% in November.

China had 222 million people aged 60 years or older as of 2015, according to Xinhua News Agency.

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The official figure is in line with the estimates of economists polled by Reuters and slightly above the 6.5% target growth Beijing set previous year.

White House officials have given markedly different views on progress so far.

Top trade envoys from both countries are due to meet at the end of January.

We had already begun to see this during the Obama years with the United States pivot to Asia to hedge against China's rise. Better educated young Chinese face more complicated but also more varied job prospects and are less inclined than their parents to marry and start a family. As pocketbooks snap shut, the downturn could worsen.

"The Chinese economy's resilience and ability to resist shocks and the long-term trend of stability has not and will not change", Ning Jizhe, commissioner of the National Bureau of Statistics, told reporters in Beijing.

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