Chinese Dragon's 28 year slow growth-rate is fast turning into a fresh headache for Global markets

Last Updated: Mon, Jan 21, 2019 11:41 hrs
China Economy (Image Courtesy: theconversation.com)

Beijing: China's economy grew 6.6% in 2018, the weakest annual performance since 1990, confirming a slowdown in the world's second-largest economy that could threaten global growth, according to official data on Monday.

The economy has tanked to a growth rate of 6.6%, which is the slowest in the last 28 years. China's growth in 2018 was down from 6.8% growth in 2017. The country's economy grew 6.4% in the fourth quarter from a year earlier, levels last seen in early 2009 at the height of the global financial crisis.

"We see that there are changes in stability, concern about these changes. The external environment is complicated and severe," Efe news quoted Ning Jizhe, director of China's National Statistic Bureau, as saying during a media conference on Monday.

"The economy is facing downward pressure," Ning added.

A cooling Chinese economy could hurt firms like Apple in the US, automobile manufacturers in Europe and mineral exporters in Australia. Economists said that China has to achieve a balance in keeping the economy growing while ensuring that debt levels do not go out of hand.

"Deceleration from 6.8% is undeniably sharp, and more worrying, set against the backdrop of US-China trade friction and the tech sector down-cycle," Vishnu Varathan, head of economics and strategy for Asia at Mizuho Bank in Singapore, told Al Jazeera.

Adding to the gloom was the ongoing trade conflict with Washington, according to the data.

The uncertain outlook for Chinese exporters caused companies to delay investing and hiring and in some cases even to resort to layoffs - a practice that is often discouraged by China's stability-obsessed Communist Party rulers. The official jobless rate ticked up to 4.9% last month from 4.8% in November.

In the southern technology and export-manufacturing centre of Shenzhen, for instance, many private makers of electronics, textiles and auto parts furloughed workers more than two months before the Lunar New Year holiday, which begins in February, according to business owners and local officials.

The neighbouring city of Guangzhou saw growth slump to 6.5% last year - well short of the 7.5% annual target set by the city government - as trade tensions hit the city's manufacturing sector hard.

Some economists and investors have said China's economy is far more anaemic than the government's 6.6% rate of expansion for 2018.

They said the government's move on Friday, just ahead of Monday's data release, to cut the 2017 growth rate to 6.8% from 6.9%, which they said provides a slightly lower base, giving a slight boost to the fresh 2018 data.

Monday's economic data also included some indications that this year's downturn may not be as severe as initially thought, reported the Guardian. The country's industrial output rose 5.7%, while retail sales increased 8.2% in December, compared to a year earlier.

Chinese Vice Premier Liu He will visit the US on January 30-31 for the next round of trade talks with Washington. US President Donald Trump said on Saturday there has been progress toward a trade deal with China, but denied that he was considering lifting tariffs.

With Agency Inputs

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