China's economic growth sinks to 3-decade low in 2018

23 January, 2019, 10:13 | Author: Erin Carter
  • Young Chinese graduates are struggling to find jobs

The world's second largest economy grew 6.6 percent in 2018, China's statistics bureau said on Monday - the slowest rate since 1990.

Data released on Monday showed Chinese economic growth slowing to 6.4% during the fourth quarter, the lowest in nearly a decade and the third quarter in a row of slowing growth.

The pace marked the fastest among the world's top five economies, noted Ning, adding that China contributed to almost 30 percent of the world's economic growth and remained the largest contributor to global growth.

With a long-term perspective to assess the country's economic performance, Liu Shijin, an economist with the China Development Research Foundation, expects the economy to enter a stage of stable medium-speed growth in 2020, saying it would last for at least 10 years. "China trade war escalates, should the temporary truce expire without any trade deal being struck", Rajiv Biswas of IHS Markit said in an email.

Japan is feeling the indirect effects of the US-China trade spat because it exports equipment and supplies used by Chinese makers of semiconductors, mobile phones and many other products.

"With increased policy stimulus, we expect growth in China to bottom out in Q1-2019 at 6.3%, followed by a mild cyclical recovery in H2".

Investment in infrastructure has continued to expand after stagnating in September 2018, while industrial output data has also shown growth in construction activities, particularly in cement and glass output.

According to the new figures, Chinese economy achieved a 6.2 per cent industrial output growth past year, compared with 6.6 per cent in 2017.

He said that China's confidence comes from the "massive consumption power" at home, with a middle class of more than 400 million, and new drives from tech and other innovative industries amid an economic upgrade.

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On a quarterly basis, the economy grew 1.5 percent in the fourth quarter, a notch down from a rise of 1.6 percent posted in the third quarter.

The deteriorating situation in China, a market that businesses around the world rely upon for growth, is having a widespread impact.

"I must say that trade and economic disagreements do have an impact on the functioning of the economy, but this influence is generally under control", Ning said at a briefing, during which the country's economic results for 2018 were announced. Better educated young Chinese face more complicated but also more varied job prospects and are less inclined than their parents to marry and start a family.

He told reporters at the White House: "Things are going very well with China and with trade".

Employment remained stable, with more than 13 million new jobs created in urban areas a year ago and the surveyed urban unemployment rate standing at 4.9 percent in December.

China's more than US$13 trillion economy will likely stabilise in the second half of 2019 without the need for aggressive stimulus, according to Goldman Sachs Group Inc chief economist Jan Hatzius.

More importantly, employment and wage growth are facing downward pressure this year.

Meantime, a downturn in iPhone sales in China has hurt Apple Inc.'s share price this month and raised question marks over whether the consumer can keep cushioning the economy's re-balancing.

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