China’s economy grew at its slowest pace in almost three decades in 2018, losing more steam in the last quarter as it battles to quell massive debt and a US trade war, official data showed on Monday.
The 6.6 percent growth comes in above the official target of around 6.5percent and matches a forecast by analysts polled by AFP, but is down fromthe 6.8 percent chalked up in 2017, according to the National Bureau ofStatistics (NBS).
And in a sign of the battle Beijing faces in getting things back on track,growth in the last three months of the year clocked in at 6.4 percent,matching a low seen during the global financial crisis 10 years ago, witheconomists widely expecting the slowdown to deepen, reports BSS.
“The ‘three critical battles’ of preventing and defusing financial risks,conducting targeted poverty alleviation, and controlling pollution got off toa good start,” said NBS commissioner Ning Jizhe in prepared remarks.
The slowing growth prompted Premier Li Keqiang last week to vow thegovernment would not let the economy “fall off a cliff”.
Relations with top trading partner the US deteriorated sharply last yearafter President Donald Trump hit roughly half of the Chinese imports with newtariffs in an attempt to force trade concessions.
The trade war is on hold for now after President Xi Jinping and Trumpagreed to a three-month ceasefire while the two sides try to find aresolution, with top negotiators set to meet in Washington at the end of themonth.
While analysts say the standoff has dented confidence — leaving the stockmarkets battered and the yuan weakened — they attribute most of the downturn to the government policies to tackle growing debt, financial risk and pollution.
China hit the brakes on major projects such as subway lines and motorwaysand held off on mountain-moving endeavours to keep a lid on debt last year, with infrastructure investment rising by just 3.8 percent, down from 19 percent the year before.
China’s exports to US and the world also fell in December, reinforcing theneed for its legions of domestic consumers to fuel the economy.
Li last week touted China’s “massive market” and vowed to spur onconsumption, but the data shows difficulty ahead.
Overall credit growth decelerated every month last year.
“The slowdown in credit growth is causing economic momentum to falter,”said Mark Williams, chief Asia economist at Capital Economics, in a note last week.
Tighter credit has hit consumer spending with car sales falling last yearfor the first time in more than 20 years.
Retail sales growth slowed to 9.0 percent, down from a 10.2 percentincrease the previous year. In December, sales grew 8.2 percent.
Output at factories and workshops ticked up 6.2 percent for the year, downfrom 6.6 percent in 2017.
The official figures could be painting an overly rosy picture, analystssay.
Economists in China and abroad have long suspected data is massagedupward, often noting that full-year gross domestic product hits Beijing’spre-set targets with suspicious regularity.
The governor of northeastern Liaoning admitted in 2017 that the industrialprovince had falsified data for years.
Even Li said in 2007, when he was Liaoning’s top political official, thatresults were often “man-made” and he used his own calculations to guideprovincial policymaking, according to a confidential memo released byWikiLeaks.
“The NBS is part of the government… that is why it is legitimate for theoutside world to worry about potential adjustment of data on the economy,”said Louis Kuijs of Oxford Economics.
The US-based Conference Board, a widely respected global business thinktank, said its methodology indicates growth of 4.1 percent for 2018.
On Friday, China revised its 2017 economic growth down to 6.8 percent from6.9 percent — a move some analysts say may have been aimed at beefing upthis year’s growth rate.
“Sceptics will be forgiven for questioning whether NBS is trying to smoothGDP growth by shifting some of the recent weakness into the 2017 figures,”said Julian Evans-Pritchard of Capital Economics in a note.