#1 China’s economy grew 6.6% in 2018, the lowest pace in 28 years by algernonpj 21.01.2019 10:35

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China’s economy grew 6.6% in 2018, the lowest pace in 28 years
Published Sun, Jan 20 2019 • 8:39 PM EST | Updated 3 hours ago
Huileng Tan @huileng_tan

  • China on Monday announced that its official economic growth came in at 6.6 percent in 2018 — the slowest pace since 1990.

  • That full-year figure matched expectations from analysts polled by Reuters.

  • Fourth-quarter GDP growth also matched expectations, coming in at 6.4 percent on-year from 6.5 percent in the third quarter.


  • China on Monday announced that its official economic growth came in at 6.6 percent in 2018 — the slowest pace since 1990.

    That announcement was highly anticipated by many around the world amid Beijing’s ongoing trade dispute with the U.S., its largest trading partner.

    Economists polled by Reuters had predicted full-year GDP to come in at that pace, which was down from a revised 6.8 percent in 2017.

    Fourth quarter GDP growth was 6.4 percent, matching expectations. That was a decline from the 6.5 percent year-over-year growth in the third quarter of 2018.

    There were a few bright spots in Monday’s batch of official Chinese economic data.

    Industrial output grew 5.7 percent in December from a year earlier — beating economists’ expectations of 5.3 percent growth — outpacing November’s 5.4 percent growth.

    Retail sales data rose 8.2 percent in December on-year, in line with a forecast and up from November’s 8.1 percent gain.

    “What we’re seeing in the fourth quarter is that, while the economy is decelerating, we actually still have some support from most of the quarters from the export front-loading,” said Helen Zhu, head of China equities at BlackRock, referring to exporters rushing to ship their goods out of China before new U.S. tariffs hit.

    Zhu told CNBC that even though she expected some support from Chinese consumption and tax cuts, growth in 2019 will decelerate this year compared with 2018.

    Although Beijing’s official GDP figures are tracked as an indicator of the health of the world’s second-largest economy, many outside experts have long expressed skepticism about the veracity of China’s reports.

    “The official GDP figures have been too stable in recent years to be a good guide to China’s economic performance,” said Julian Evans-Pritchard, senior China economist at Capital Economics, a research house.

    “But for what it’s worth, the headline breakdown suggests that service sector activity strengthened slightly last quarter,” he added.

    Is China’s growth story over?

    Chinese statistics bureau chief Ning Jizhe told reporters on Monday that his country’s trade dispute with the U.S. has affected the domestic economy, but the impact was manageable, Reuters reported. He said China’s economy has shown a slowing but stabilizing trend in the last two months, and that it was still driven overall by domestic demand.

    Even before increased trade tensions with the U.S., China was already trying to manage a slowdown in its economy.

    Beijing is trying to balance a crackdown on high debt levels while also maintaining economic growth. While reducing reliance on debt would benefit the economy in the long run, it likely means a far slower pace of growth than the country has seen in recent years.

    Nevertheless, economic data from China are being closely watched for signs of damage inflicted by the trade war with Washington.

    While official data indicated China’s economy held up for much of last year, it now appears to be slowing. Production metrics and export orders are falling as the country’s trade dispute with the U.S. drags on and other factors weigh on growth.

    Both sides have been trying to negotiate a deal.

    China has offered a six-year boost in imports during its ongoing talks with the U.S., officials familiar with the matter told CNBC last week.

    China pegged its proposal to buy more U.S. goods through 2024 to President Donald Trump’s hopes of being re-elected in 2020, the sources told CNBC.

    China’s top trade negotiator, Vice Premier Liu He, will visit Washington, D.C., on Jan. 30 for two days of talks with U.S. trade representative Robert Lighthizer.
    China to boost economy through policies

    Acknowledging that China’s development faces a more complicated and difficult external environment in 2019, the country’s statistics bureau chief Ning said there is still ample ability to institute new support, Reuters reported.

    Analysts are expecting Beijing to roll out further stimulus in the month ahead.

    Tao Wang, UBS Investment Bank’s Asia economics head and chief China economist, said she expected Beijing to roll out further cuts to the reserve requirement ratio — the amount of cash that banks have to hold as reserves.

    Together with other policy tweaks such as tax cuts and infrastructure spending, China’s growth can be stabilized so that the economy achieves a “soft landing,” Wang told CNBC. UBS forecast China’s GDP growth to be 6.1 percent in 2019.

    —CNBC’s Kayla Tausche and Michael Sheetz and Reuters contributed to this report.
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    https://www.cnbc.com/2019/01/21/china-20...arter-year.html

    #2 RE: China’s economy grew 6.6% in 2018, the lowest pace in 28 years by algernonpj 21.01.2019 14:31

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    Chinese President Xi warns party of ‘serious dangers’ as risks mount
    Bloomberg Updated on January 21, 2019

    “The party is facing long-term and complex tests in terms of maintaining long-term rule, reform and opening-up, a market-driven economy and within the external environment,” Xi said.

    President Xi Jinping stressed the need to maintain political stability in an unusual meeting of China’s top leaders — a fresh sign the ruling party is growing concerned about the social implications of the slowing economy.

    Xi told a seminar of top provincial leaders and ministers in Beijing on Monday that the Communist Party needed greater efforts to prevent and resolve major risks, the official Xinhua News Agency said. He said areas of concern facing the leadership ranged from politics and ideology to the economy, environment and external situation.

    “The party is facing long-term and complex tests in terms of maintaining long-term rule, reform and opening-up, a market-driven economy and within the external environment,” Xi said, according to Xinhua.

    The party is facing sharp and serious dangers of a slackness in spirit, lack of ability, distance from the people and being passive and corrupt. This is an overall judgement based on the actual situation.

    Although Xi has issued similar warnings previously, including in February 2018, Monday’s statements contained signs of greater urgency. The mention of the serious threats to the party’s long-standing rule appeared new. A full transcript of his remarks to the closed-door gathering was not immediately available.

    Xi is seeing more and more red flashes on his monitor as things on many fronts go wrong, said Ether Yin, partner at Beijing-based consultancy Trivium China. He wanted to draw the whole systems attention to that.

    Slowing down?

    The meeting was held on the same day that China reported its slowest quarterly economic growth since the depths of the global financial crisis in 2009. The data underscored concerns that the decades-long economic expansion that helped the ruling party outlast most other communist regimes may be running out of steam.

    Chinese leaders are also coping with a more confrontational US under President Donald Trump, who has slapped tariffs on hundreds of billions worth of dollars of Chinese goods, roiling financial markets around the world. Xi faces added pressure to personally resolve the issues after obtaining a constitutional change that allows him to rule indefinitely.

    The meeting appears to have been scheduled recently, since several provincial legislatures rescheduled their annual meetings to accommodate the event. State media offered no advance notice of the gathering.

    While Xi has occasionally assembled the party’s more than 200-member Central Committee to study pressing issues, this was the first such seminar held without convening a full meeting of the body. A Central Committee meeting known as a plenum was expected late last year — a point in the political cycle when the party usually tackles economic policies — but has yet to be announced.

    Communist leaders are facing a year rich with sensitive dates, including the 70th anniversary of the country’s founding on October 1 and the 30th anniversary of the party’s crackdown on democracy activists in Tiananmen Square on June 4. Such occasions have sometimes helped coalesce criticism of the regime, and China often rounds up dissidents in advance.

    “That’s a cocktail that could be explosive as people realise the CCP is no longer delivering the goods on the social contract,” said Dennis Wilder, a Professor at Georgetown University and former senior director for Asia on the National Security Council.

    The slowdown of the economy to rates not experienced in the reform area is uncharted territory for this generation of leaders of the Communist Party.
    Published on January 21, 2019

    https://www.thehindubusinessline.com/new...cle26051807.ece

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