Chinese Authorities Recognise Impact of Trade War With US on Country's Economy

Daniel Fowler
January 21, 2019

China´s economy grew at its slowest pace in nearly three decades in 2018, losing more steam in the last quarter as it battles to quell massive debt and a USA trade war, official data showed Monday.

Chinese crude oil refineries processed an average 12.07 million barrels of oil daily in 2018, up by 6.8 percent on the year and the highest daily processing rate on record, government statistics show, as cited by Reuters.

The slowdown was expected by economists.

"The "three critical battles" of preventing and defusing financial risks, conducting targeted poverty alleviation, and controlling pollution got off to a good start", said NBS commissioner Ning Jizhe in prepared remarks.

Still, Ning insisted China can resist shocks, saying "the long-term trend of stability will not change".

Figures from the bureau also showed that the economy grew by 6.4 percent in the final quarter of 2018.

Premier Li Keqiang has also vowed to keep economic growth within a "reasonable range" by promoting more innovation.

Growth in investment, retail spending and factory activity all declined, though analysts pointed to a flicker of improvement in manufacturing in December.

In December, property sales by floor area, a major indicator of demand, rose a touch by 0.9 percent from a year earlier, the first gain in four months and compared with November's 5.1 percent drop.

Production of plastics, metals and specialized industrial machinery accelerated, "suggesting warming expectations for a pick-up in investment", Chaoping Zhu of J.P. Morgan Asset Management said in a report.

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"For the world´s second-largest economy, where trade accounts for one-third of GDP, this has an impact", he said, adding "downward pressure" on the economy has increased.

Exports held up through most of 2018 despite President Donald Trump's tariff hikes on Chinese imports in a fight over Beijing's technology ambitions. But they contracted in December as the penalties began to depress US demand.

New refineries including Zhejiang Petrochemical and the Sinopec-Kuwait refining complex in Zhanjiang were expected to add 32 million tonnes of new refining capacity to the world's largest energy consumer, according to the research unit of China National Petroleum Corp (CNPC).

The trade dispute, and reports of job losses and tumbling sales of autos and real estate, have unnerved Chinese consumers that Beijing is counting on to drive growth. As pocketbooks snap shut, the downturn could worsen.

China's top trade negotiator, Vice Premier Liu He, is scheduled to visit meet with USA trade representative Robert Lighthizer in Washington, D.C.at the end of January.

Relations with top trading partner the U.S. deteriorated sharply previous year after President Donald Trump hit roughly half of Chinese imports with new tariffs in an attempt to force trade concessions.

China's population rose by 15.23 million people in 2018, marking a continued decrease in the growth rate of the world's most populous nation. "However, non-infrastructure business activities will be dismal this year".

Chinese leaders warned earlier any recovery would be "L-shaped", meaning companies and investors shouldn't expect growth to rebound to the previous decade's double-digit levels.

The 6.6 percent is above the official target of around 6.5 percent, according to the data by the NBS.

Last December China's exports fell to United States dollars 221.5 billion registering biggest plunge in two years amid the trade war with USA, highlighting the continued slowdown of the world's second largest economy.

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