China records slowest growth rate in almost 30 years

Daniel Fowler
January 22, 2019

Real estate investment, which mainly focuses on the residential sector but includes commercial and office space, rose 8.2 percent in December from a year earlier, down from 9.3 percent in November, according to Reuters calculations based on data released by National Bureau of Statistics (NBS) on Monday.

China's two-child policy implemented in 2016 has failed to make an impact on the country's low birth rate as the number of new-borns dropped by two million previous year in the world's most populous nation, according to official figures released Monday.

The official figure is in line with the estimates of economists polled by Reuters and slightly above the 6.5% target growth Beijing set a year ago.

Slowing disposable income growth and tighter credit has hit consumer spending with auto sales falling last year for the first time in more than 20 years.

The new data lowering the figures was released on Friday after final verification pointing to the continued slowdown of China's economy. But the slowdown has been sharper than expected, prompting Beijing to step up government spending and order banks to lend more to shore up growth and avoid politically risky job losses.

China's government raised the limit to two children in 2016 to rejuvenate the world's most populous country, which has almost 1.4 billion people, and experts say it may remove the cap next year.

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In the three months to December, the economy grew 6.4% from a year earlier, down from 6.5 percent in the previous quarter. "That announcement was highly anticipated by many around the world amid Beijing's ongoing trade dispute with the US, its largest trading partner". "Weak exports and investment restraint are already having an impact on growth", he added.

The slowdown is adding to pressure on President Xi Jinping's government to settle its dispute with Washington. Both countries have slapped billions of dollars worth of tariffs on each other's goods and are now negotiating a deal to end the dispute. Washington wants China to roll back plans for state-led industry development that its trading partners say violate its market-opening obligations. As pocketbooks snap shut, the downturn could worsen.

Monday's new data confirming the slowdown of the economy came ahead of key talks between top trade officials from the United States and China in Washington on January 30-31.

Business groups and economists said a decision by Liu and his American counterpart, Robert Lighthizer, to get directly involved would suggest earlier talks by lower-level officials made progress. They predict the decline will bottom out this year as Beijing's stimulus efforts gain traction.

In thin holiday trade in the U.S., copper for delivery in March slumped 1.6% compared to Friday's close to $2.7655 per pound ($5,897 a tonne) on the Comex market in NY wiping out the metal's gains for the year. "China trade war escalates, should the temporary truce expire without any trade deal being struck", Rajiv Biswas of IHS Markit said in an email.

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