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

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

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

China's economy in 2018 grew at its weakest annual pace in almost three decades amidst a protracted trade war with the United States, putting pressure on Beijing to reach a deal with Washington and to amp up stimulus measures in efforts to avert a sharper slowdown.

The data was in line with forecasts but underlines recent concern about weakening growth in the world's second largest economy. The year prior, China's economy grew at a 6.8 percent rate, revised down from 6.9 percent earlier.

Communist leaders want to steer China toward slower, more self-sustaining growth driven by consumer spending instead of trade and investment. But the slowdown has been sharper than expected, prompting Beijing to boost spending on construction of roads and bridges and to order banks to lend more, especially to the entrepreneurs who generate most of China's new jobs and wealth.

"Considering the deterioration of corporate profitability, the downward pressure on the real estate market, still uncertain external demand, and the decline in the growth rate of new service industries, pressure on employment in many industries this year can not be ruled out, "the CICC analysts said".

Economic activity held up through most of 2018 despite President Donald Trump's tariff hikes on Chinese imports in a fight over Beijing's technology ambitions.

Growth in property investment in China cooled to the second slowest pace in 2018 in December, adding to signs of a further slackening in the real estate market in a blow to a key driver economic growth.

The trade war is on hold for now after President Xi Jinping and Trump agreed to a 3-month ceasefire while the two sides try to find a resolution, with top negotiators set to meet in Washington at the end of the month.

The two sides have imposed tariff hikes of up to 25 percent on tens of billions of dollars of each other's goods in the fight over USA complaints that Beijing steals or pressures companies to hand over technology. 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 U.S. and China in Washington on January 30-31.

The talks will be held between Chinese Vice Premier Liu He and U.S. trade representative Robert Lighthizer to work an agreement before the March 1 deadline failing which President Donald Trump has threatened to slap additional tariffs on all Chinese exports to the US.

Monday's data also showed consumption played an increasingly bigger role in the economy, contributing 76.2 percent of GDP growth, up significantly by 18.6 percentage points from a year ago. They predict the decline will bottom out this year as Beijing's stimulus efforts gain traction.

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.

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