China GDP grows 6.1% in 2019, slowest rate in 29 years

[steveluv]

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China GDP grows 6.1% in 2019, slowest rate in 29 years

Sliding birthrate, tariffs and weak manufacturing investment remain a drag
CK TAN, Nikkei staff writer
January 17, 2020 11:06 JST Updated on January 17, 2020 13:48 JST

Demand for key Chinese exports such as cellphones and PCs was sluggish in 2019.    © AP 

SHANGHAI -- China's gross domestic product grew at the slowest pace in 29 years in 2019, as weaker exports, investment and consumer spending weighed on the economy.

The 6.1% expansion marked a slowdown from the 6.6% growth seen the previous year, the National Bureau of Statistics said Friday. Growth in the last quarter of 2019 equaled the 6.0% logged in the July-September period.

The bureau said China will remain vigilant of mounting downward pressure from a global economic slowdown and domestic structural issues. The downward trend will not be helped by a sliding birthrate, rising unemployment and problems in the banking sector.

The 0.5 percentage point decline in the growth rate from the previous year is the biggest since a 1.7 point year-on-year slowdown in 2012. The rate of growth in 2019 was lower than the median 6.2% expansion forecast by economists surveyed by Nikkei, but within the 6% to 6.5% range set by the government.

"Economic activity picked up last month, helping to avert a further slowdown last quarter," Julian Evans-Pritchard and Martin Rasmussen wrote in an emailed note. "External headwinds should ease further in the coming quarters thanks to the 'Phase One' trade deal and a recovery in global growth. But we think this will be offset by a renewed slowdown in domestic demand, triggering further monetary easing."

Total retail sales of consumer goods including e-commerce slowed to 8%, from 9% in 2018, while fixed-asset investment including infrastructure and factory construction decreased to 5.4% from 5.9%.

Final quarter growth holding steady reflects the effect of fiscal stimulus, and respite from the trade war cease fire, said Zhu Chaoping of J.P. Morgan Asset Management.

China also unveiled data on Friday showing the nation's population growth rate (births minus deaths) falling to 3.34 per thousand in 2019 -- the lowest since 1961, and down from 3.81 the previous year. The decline in the fertility rate in an aging society is another headwind for economic growth.

The moderation in full-year growth reflected lower demand for Chinese goods, which has been dampened by the trade war with the U.S., and weaker global electronics orders, according to Rajiv Biswas, Asia chief economist at IHS Markit.

Exports for the year totaled $2.498 trillion, up 0.5% -- much slower growth than in 2018, largely due to a drop in shipments to the U.S.

Demand for key Chinese exports such as cellphones and PCs was sluggish. Exports of products subject to higher U.S. tariffs, such as furniture and textiles, also slumped

Despite a "phase-one" deal reached between Beijing and Washington on Wednesday, which will see the U.S. lower tariffs on $120 billion of Chinese goods in return for Beijing buying $40 billion worth of American farm goods, economists remained downbeat on China's growth outlook this year.

"While businesses and investors can afford to breath a sign of relief, after a difficult 2019, we still see risks to the China outlook as mainly weighted to the downside, given the fragile nature of the trade truce and the risks that still stalk China's financial markets," according to Tom Rafferty at the Economist Intelligence Unit.

More than 20 economists surveyed by Nikkei forecast a median 5.9% expansion in 2020, with many expressing concern local governments' worsening fiscal positions and lackluster manufacturing investment.

"The pace of growth is expected to edge lower to below 6%, as ongoing structural reforms in the Chinese economy and the continued impact of [the] remaining U.S. tariffs of 25% on $250 billion of Chinese products remain a slight drag on the growth outlook," said Biswas.

More fiscal stimulus could be on the way, as the government said during a high-level economic work meeting last month that it will prioritize "stability" to mitigate rising domestic risks.

"Consumer spending has yet to pick up the baton from investment as an engine of growth," said Diana Choyleva, chief economist at Enodo Economics.

But the truce in the trade war with Washington may bring some temporary relief for business confidence, according to Fitch Ratings, which on Friday raised its outlook for GDP growth in 2020 to 5.9%, up 0.2 percentage points.

[inlinesix]

It might drop further in 2020

[Jamesc]

After 30 years of red hot growth its natural to grow more slowly.

The problem is every year million of graduates leave school and cannot find jobs with slower growth.

This would have been a problem for the Chinese gov

But with the Trump trade war the Chinese gov can blame Trump for millions of young workers cannot find jobs.

Haha it was stoopid timing by Trump and the best thing that could happen to China.

Trump did Xi a favour unintentionally.

[Jamesc]

China is shifting from a low skill low wage manufacturing economy to a service economy.

And from an export economy to servicing the consumer in China.

So this transition will be difficult as factories close down and people lose job and need to retrain to do more high value service jobs.

No one is blaming the Chinese gov they think its all caused by Trump.

Toopid scapegoat.

[Wt_know]

without china the “world factory”

who is making cheap things for my taobao orders?  

Edited January 18, 2020 by Wt_know

[Beregond]

its easy to grow from level 1 to level 7. 

7-8 will be hard, 

8- 9 or 10 will be 10 times harder.

we facing more or less same problem 

[Windwaver]

Actually China's internal economy is self sufficient, they are being nice to the world 

[Wt_know]

3 minutes ago, Windwaver said:

Actually China's internal economy is self sufficient, they are being nice to the world 

what’s wrong to collect more ... 

[Voodooman]

6 minutes ago, Windwaver said:

Actually China's internal economy is self sufficient, they are being nice to the world 

Yes, exports is no longer that big an engine. They just have to boost domestic consumption and investment and they should be good. Another few more years and the table will turn.  

[Wt_know]

in 2020 got orders to print Make USA Great Again ...  

[Victor68]

I wonder which country GDP is higher last year and why. Is GDP growth means people are living better?

[Playtime]

34 minutes ago, Victor68 said:

I wonder which country GDP is higher last year and why. Is GDP growth means people are living better?

I think there's a growing school of thought that total pursuit of GDP as a measure may not be the best or correct way. 

But I'm no economist.. not enough knowledge to understand the arguments. 

[inlinesix]

On 1/18/2020 at 1:16 PM, Voodooman said:

Yes, exports is no longer that big an engine. They just have to boost domestic consumption and investment and they should be good. Another few more years and the table will turn.  

Go to YouTube and search 高善文。He gave a 2hr talk on China next 10 years outlook in November 2019. It’s not that rosy.

By the way, his speech was blacklisted in PRC.

[Voodooman]

5 minutes ago, inlinesix said:

Go to YouTube and search 高善文。He gave a 2hr talk on China next 10 years outlook in November 2019. It’s not that rosy.

By the way, his speech was blacklisted in PRC.

There are many views out there.  

What is yours? 

[inlinesix]

3 minutes ago, Voodooman said:

There are many views out there.  

What is yours? 

In next 10 years, 包四爭五。

[Victor68]

All these 'experts' views are only based on assumptions. Today economy is very dynamic and ever changing. Events can throw everything out of context. Even people like Trump or Xi sudden death will change things.

Will the world ends? No for sure even there is war. Countries with good fundamentals in place will survive and do well. Bigger countries will grow or fall faster than others, that is given.

Edited January 20, 2020 by Victor68

[inlinesix]

58 minutes ago, Victor68 said:

All these 'experts' views are only based on assumptions. Today economy is very dynamic and ever changing. Events can throw everything out of context. Even people like Trump or Xi sudden death will change things.

Will the world ends? No for sure even there is war. Countries with good fundamentals in place will survive and do well. Bigger countries will grow or fall faster than others, that is given.

Currently, China is moving back to centralized planning economic. In addition, there is huge expenditure in purchase of MIA goods. How to boost GDP further?

[Lala81]

Lot of economic challenges in this coming decade for all countries. 

And with that will come with political uncertainty (excepting our dear old Singapore of course).