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Beijing: The Chinese economy cooled in the fourth quarter under pressure from weak domestic demand and US tariffs, bringing growth to 2018 at its lowest level in almost 30 years and forcing Beijing to revive more to avoid a more pronounced slowdown.
Growing signs of weakness in China – which has generated nearly a third of global growth in recent years – fuel concern over risks to the global economy and weigh on corporate profits ranging from Apple to major automakers. [19659002] Policymakers have pledged to strengthen support this year to reduce the risk of mbadive job losses, but have ruled out a "surge" of stimulus measures similar to those on which Beijing has been reluctant. supported in the past, which quickly accelerated growth rates but left a mountain of debt.
"The government has the means to support the economy, it can increase infrastructure spending and reduce the ratio of bank reserve requirements, so we do not have to worry about spending in capital, "said Naoto Saito. , chief researcher at the Daiwa Research Institute in Tokyo.
"But the problem lies in consumption As the US and China fight on many fronts, consumer sentiment seems to have been hit hard." So far, solid wage growth supported the consumption, but it seems that the future raises a wave of worry. "
The fourth quarter gross domestic product (GDP) has experienced the slowest growth since the global financial crisis. The National Bureau of Statistics (NBS) announced Monday that the annual growth rate was 6.6%, as expected, compared to 6.5% in the third quarter.
This reduced annual growth to 6.6%, the slowest annual rate since 1990. revised by 6.8%.
While the support measures are expected to take some time, most badysts believe that the conditions are likely to worsen before improving and that the slowdown rate should reach 6.3% this year. year.
Some Chinese observers. believe that real growth is already weaker than official data suggests.
APLENTY UNCERTAINTIES
Despite a series of policy easing measures to date, data released in December and GDP have shown continuing weakness in large areas of the economy. l & # 39; economy. at the end of the last
Factory production increased unexpectedly, from 5.4% to 5.7%, but it was one of the few positives, along with the strengthening of the service sector.
Regulators accelerated construction projects, but most of the gain came as a result of rising mining and oil production. According to Reuters calculations, average daily steel production reached its lowest level since March, as producers reduced production despite shrinking profit margins.
Despite the slowdown in the economy, the Chinese authorities have also pledged to continue the fight against air pollution that weighed on the industrial sector.
Other data released on Monday show that investment and retail sales continued to weaken, while the unemployment rate edged up.
Investment in fixed badets rose 5.9% in 2018, the slowest rate in at least 22 years. financing and debt weighed on local government spending early in the year.
Real estate investments are also uncertain. Analysts are waiting to see if Beijing risks easing restrictions on homebuyers who have limited the potential housing bubble.
Chinese consumers clearly feel the pressure.
While retail sales growth edged up in December to 8.2%, the consumer's dipstick is about equal to the average. It's 15 years from now. Automotive sales in the world's largest auto market have declined for the first time since the 1990s.
Authorities recently committed to boosting consumer demand for expensive items ranging from cars to appliances appliances. But gains in disposable income are slowing, while household debt is rising.
Other data in recent weeks have shown an unexpected contraction in exports and imports last month, while lower plant orders suggest a further decline in activity over the past few weeks. next few months and an increase in employment.
Some factories in Guangdong – China's export hub – have closed earlier than usual before the Lunar New Year holidays as new business runs out.
THE PRESSURES OF TRADE
Even though China and the United States are in agreement on a trade agreement in the current negotiations, this would be a difficult task, according to some badysts, that this would not be a panacea for China or its exporters.
Demand is weakening globally, not only in the United States. Net exports actually weighed on Chinese growth of 8.6% last year, according to Reuters calculations based on official data.
Trade negotiators face a deadline set in early March and Washington has threatened to raise tariffs significantly without substantial signs of agreement. 19659002] White House officials have expressed distinctly different views on the progress made so far. Chinese Vice Premier and Chief Negotiator Liu He is due to visit Washington for the next round of talks at the end of the month.
MORE STIMULUS
To release more funds for loans, especially for vulnerable small businesses, the central bank reduced the amount of reserves that banks must reserve (RRR) five times over the past year and has reduced borrowing costs.
Further RRR cuts are expected over the next few quarters, but most badysts still do not see any decline in benchmark interest rates, as policymakers wait to see if previous measures are going to start to stabilize the activity.
Stronger easing could also put pressure on the yuan and exacerbate high debt levels as funds become less efficient or less profitable. speculative investments as it often does in the past.
At the March annual meeting of Parliament, the government could unveil more fiscal stimulus measures, including greater tax cuts and more infrastructure spending.
Lysts believe they can cut 2,000 billion yuan ($ 295.13 billion) in taxes this year, and allow local governments to issue another $ 2 trillion in special obligations widely used to finance key projects.
Political adjustments, said Monday the head of the statistics bureau, Ning Jizhe.
Still, some badysts do not expect the economy to reach a lows before summer.
This story was published from an agency of transmission without modification of the text.
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