Here’s an unwelcome throwback to the ’90s.
China’s economy grew 6.6% last year, according to official data released Monday — its slowest pace since 1990.
The official figure is in line with the estimates of economists polled by Reuters and slightly above the 6.5% target growth Beijing set last year. Now the government is aiming for growth between 6% and 6.5% in the year ahead, while economists predict growth in 2019 will be closer to 6.3%.
Beijing’s efforts to rein in debt dragged on China’s economy in 2018. The country is also under pressure from the trade war with the U.S., although the head of China’s National Statistics Bureau described the fallout from this as “manageable”.
Earlier this month Apple issued a rare earnings warning, blaming a slowdown in sales on China’s weaker consumer spending power. Consumption has driven the country’s economic growth for nearly a decade.
China has accounted for a third of global annual growth over the past decade too, and the world has relied on the country to pull the broader economy out of recession. A dramatic slowdown in China’s economy would, therefore, threaten the global recovery.
It’s worth remembering that although China’s growth has slowed, the economy is still growing. Its GDP increased by Rmb7.3 trillion ($1.08 trillion) last year, capping at Rmb90 trillion ($13.26 trillion).
Beijing’s propaganda wizards say the economy’s slow growth signifies the nation’s transition from a debt-fuelled economy to one led by innovation and top officials have long branded slower growth the “new normal” for China’s economy.
Problem is China depends on strong growth to relieve debt pressure and many analysts fear its actual GDP and related growth is far lower than reported.
Shortly ahead of revealing data for 2018, Beijing announced Rmb1.3 trillion ($193 billion) of stimulus measures, including tax cuts for small businesses, to inject some adrenaline into the sluggish economy.