China: Better December growth despite a slower Q4 - Standard Chartered

Chinas economy grew at slowest pace in 28 years in 2018

China is expected to report on Monday that economic growth cooled to its slowest in 28 years in 2018 amid weakening domestic demand and bruising USA tariffs, adding pressure on Beijing to roll out more support measures to avert a sharper slowdown.

Expert predicts that China's GDP will grow at 6.4 percent in 2019, higher than the IMF's estimate of 6.2 percent, as the world's second-largest economy is grappling with the challenges of a slower growth and damaging trade war.

China-US trade disagreements have a certain impact on the Chinese economy, but this influence is under control, Director of the Chinese National Bureau of Statistics (NBS) Ning Jizhe has stated. While that sounds great from a US or European perspective, different standards apply to the previously booming Chinese economy, where 6.6 percent is the lowest growth rate since 1990.

China added almost a third of the approximately $23 ten added to global GDP in the 10 years up to 2017.

But he also flagged the risk to sentiment and investment from the trade war and cautioned that negotiations between the USA and China could yet fail to resolve their differences. The slowing growth, which comes amid falling demand for exports and slower domestic spending, has put pressure on authorities to resolve the trade dispute with the US.

"With increased policy stimulus, we expect growth in China to bottom out in Q1-2019 at 6.3%, followed by a mild cyclical recovery in H2".

The government's response with targeted stimulus measures is also being tested by the standoff with US President Donald Trump over trade at a time when the global expansion is already looking shakier.

Retail sales grew 8.2 per cent December compared to a year earlier, up slightly from 8.1 per cent in November, which was the lowest growth rate in 15 years.

The reading was lower than the 6.8-percent growth registered in 2017.

China isn't set to come to the rescue of a weakening world economy even amid signs policy makers are successfully cushioning some of its slowdown.

"Growth will remain under pressure in the coming months and policymakers will aim to halt the slowdown in growth, rather than try to engineer a significant pick-up in growth", said Louis Kuijs of Oxford Economics.

In case you are still wondering why China's economy has the potential to drag on the whole world's economy, this infograph shows the way that the global GDP is formed.

Monday's data also showed consumption played an increasingly bigger role in the economy, contributing 76.2 percent of GDP growth, up significantly by 18.6 percentage points from a year ago.

It's worth remembering that although China's growth has slowed, the economy is still growing. China's growth data are generally taken with a fairly large grain of salt with many analysts, both within China and externally, regarding them as overstated.

Berlin-based think tank Mercator Institute for China Studies, published a report January 10 projecting that if the trade dispute can't be settled, China's export sector could "take an immediate hit, leading to mass layoffs of workers".

Meantime, a downturn in iPhone sales in China has hurt Apple Inc.'s share price this month and raised question marks over whether the consumer can keep cushioning the economy's re-balancing.

Still, officials said there was room for policies to counter the slowdown.

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