China's 2019 economic growth weakens amid trade war

China’s economic growth sank to a new multi-decade low in 2019

While the tariff war with the U.S. has eased with the signing of the phase one trade deal, the image of the trade war is there in China's latest numbers.

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China’s economic growth sank to a new multi-decade low in 2019.

The world’s second-largest economy grew by 6.1 percent, down from 2018’s 6.6 percent, already the lowest since 1990, government data showed Friday.

Growth in the three months ending in December held steady at the previous quarter’s level of 6 percent over a year earlier.

Business sentiment received a boost from Wednesday's signing of an interim deal in the costly war over Beijing's technology ambitions and trade surplus.


President Trump signed a landmark trade agreement with China, heralding a period of detente in a trade war between the world's two largest economies fueled by decades of complaints that Beijing was manipulating its currency and stealing trade secrets from American firms.

The pact, detailed in a 94-page document, is only the initial phase of a broader deal that Trump has said may come in as many as three sections.

President Donald Trump signs a trade agreement with Chinese Vice Premier Liu He, in the East Room of the White House, Wednesday, Jan. 15, 2020, in Washington. (AP Photo/Evan Vucci)

"Together, we are righting the wrongs of the past," Trump said in a pomp-filled signing ceremony. "It doesn't get any bigger than this."

The Trump administration agreed to cancel planned tariff hikes on additional Chinese imports and Beijing promised to buy more American farm goods, though punitive duties already imposed by both sides stayed in place.

Chinese exporters have been battered by President Trump's tariff hikes, but a bigger blow to the economy came from weakness in consumption.

Households, spooked by the trade war and job losses, put off big purchases. Auto sales fell for second year in 2019, tumbling 9.6 percent. Growth in retail spending decelerated to 8 percent over a year earlier, down from 8.2 percent in the first nine months of the year.


The economy faces “downward pressure” and “instability sources and risk points” abroad are increasing, the government said in a statement.

The trade war adds to pressure on Chinese leaders who also are struggling to shore up growth and rein in surging food costs following a disease outbreak that slashed supplies of pork, the country’s staple meat, and sent prices soaring.

The cost of pork spiked 42.5 percent in 2019, propelling food price inflation to 7 percent, more than double the ruling party's 3 percent target.

Chinese exports ended 2019 up 0.5 percent despite the tariff war and weaker global demand.

Manufacturers stepped up efforts to sell to other markets, recording double-digit gains in exports to France, Canada and other economies.


“Sluggish global growth will continue to challenge the external outlook, but we expect the phase one deal with the U.S. to have a favorable impact on exports and support domestic sentiment and confidence,” said Louis Kuijs of Oxford Economics in a report.

2019 economic growth came in at the low end of the ruling party’s official target of 6 percent to 6.5 percent.

The International Monetary Fund and private sector forecasters expect this year's growth to decline further to as low as 5.8 percent. That would be barely one-third of 2007's record 14.2 percent expansion but still would be among the world's strongest.

The party is trying to steer China to slower, more manageable growth, but an abrupt downturn in activity and the clash with Washington forced the ruling party to step up government spending and take other measures to support growth.

The central bank has tried to lower borrowing costs and channel credit to entrepreneurs who generate China’s new wealth and jobs. But Beijing has avoided a large-scale stimulus that might reignite a rise in debt that already is so high that rating agencies have cut its credit rating for government borrowing.

Factory output rose 5.7 percent over 2018, down from 6 percent for the first six months of the year.


“The outlook for 2020 is for continued resilient growth, boosted by the Phase One trade deal with the U.S. and the continued positive impact” of government stimulus, said Rajiv Biswas of IHS Markit in a report.

The Associated Press contributed to this article.