China sees economy cool at end of 2018
China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs
This dragged their 2018 growth to the lowest in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown.
Growing signs of weakness in China — which has generated nearly a third of global growth in recent years — are fueling anxiety about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers.
Policymakers have pledged more support this year to reduce the risk of massive job losses, but have ruled out a “flood” of stimulus like that which Beijing has relied on in the past, which quickly juiced growth rates but left a mountain of debt.
“The government has means to support the economy. They can expand infrastructure spending and they can cut banks’ reserve requirement ratio. So we don’t need to worry about capital spending,” said Naoto Saito, chief researcher at Daiwa Institute of Research in Tokyo.
“But the problem lies in consumption. As the U.S. and China clash on many fronts, consumer sentiment appears to have been hurt. Until now, solid wage growth has been supporting consumption but now there appears to be a sense of vague anxiety about the future.”
Fourth-quarter gross domestic product grew at the slowest pace since the global financial crisis, easing to 6.4 percent on-year as expected from 6.5 percent in the third quarter, the National Bureau of Statistics said on Monday.
That pulled full-year growth down to 6.6 percent, the slowest annual pace since 1990. GDP in 2017 grew a revised 6.8 percent.
With support measures expected to take some time to kick in, most analysts believe conditions are likely to get worse before they get better, and see a further slowing to 6.3 percent this year.
Some China watchers believe actual growth is already weaker than official data suggest.
Despite a raft of policy easing steps so far, December data released along with GDP showed continued weakness across broad areas of the economy at the end of last year.
Factory output picked up unexpectedly to 5.7 percent from 5.4 percent, but it was one of the few bright spots, along with a stronger services sector.
While regulators have been fast-tracking construction projects, most of the gain appeared due to higher mining and oil production. Reuters calculations showed average daily steel output hit its lowest level since March as producers cut output amid shrinking profit margins.
Despite the slowing economy, Chinese officials also pledged to continue with a crackdown on air pollution that has weighed on the industrial sector.
Published: by Radio NewsHub