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China's economy expands 6.1% in 2019, in line with official target

Updated: Jan 18,2020 02:23 PM    CGTN

China's economy grew 6.1 percent in 2019, according to official figures. The number is in tandem with the target range of 6.0 to 6.5 percent projected early last year.

The reading from the National Bureau of Statistics (NBS) was lower than the 6.6 percent gain registered in 2018 and came in at the slowest pace since 1990. But it is still one of the fastest rates of economic growth around the world in a lackluster global economic environment dragged down by wild cards of geopolitical tensions and tit-for-tat tariffs.

Bright spots in Chinese economy

China's per capita gross domestic product (GDP) in the past year stood at 70,892 yuan or $10,276, breaking through the $10,000 mark for the first time in history and achieving a new leap, according to Ning Jizhe, head of the NBS.

GDP carried on its upward trend and came to a climax of 99.09 trillion yuan ($14.38 trillion) in 2019, with the service sector accounting for more than half of the total. Fourth-quarter GDP growth settled at 6.0 percent, in line with expectations and steady from the pace in the third quarter, NBS data showed.

The world's second-largest economy has pledged to attach more importance to the quality of development, embracing a healthier economy structure, and a preferable business environment, instead of just putting economic growth under the limelight.

China's foreign trade edged down one percent for all of 2019 to settle at an all-time high of $4.6 trillion, with exports climbing 0.5 percent and imports, contracting 2.8 percent. This resulted in a trade surplus of $421.5 billion, 25.4 percent higher from a year earlier, the third highest since 1950, 2015, and 2016.

Other data in recent weeks showed exports increasing 7.6 percent from a year earlier to stay at $237.7 billion in December 2019, ending four straight months of contraction. Imports in the interim skyrocketed 16.3 percent year-on-year to end up with $190.9 billion, the second monthly consecutive build-up after six straight months of drop.

The value-added industrial output went up 5.7 percent year-on-year in 2019, slowing from the 6.2 percent growth registered in 2018.

Consumption remained the overriding growth engine fueling the country's economy, with retail sales, a major indicator of consumption growth, rising 8 percent compared to the same period last year.

The batch of official Chinese economic data also showed property investment rose 9.9 percent in 2019 from a year earlier. Fixed-asset investment notched up a gain of 5.4 percent for the full year, versus expectations for a 5.2 percent gain, the same as in the first 11 months of the year.

Economic package works

Even before drawn-out and bruising trade tensions with the US, China still made it to manage a slowdown in its economy over the past year via a raft of economic stimulus and ample ability to institute new support, together with other policy tweaks such as tax cuts and infrastructure spending.

China's policymakers rolled out a raft of policies last year to shore up the economy weakened by looming global uncertainties and reduce the risk of massive job shedding via tax and fee cuts. That concrete figure, according to the Ministry of Industry and Information Technology (MIIT), is to settle at 2.36 trillion yuan ($340.73 billion).

Tax cuts for the manufacturing sector and ancillary industries comprised nearly 70 percent of the annual value-added tax reduction, coupled with inclusive tax reduction for small and micro enterprises to the tune of 250 billion yuan.

Realizing that China's development faced a more complicated and difficult external environment didn't rattle Chinese officials, who ratcheted up their efforts to push forward high-level opening-up and shortened the negative list that outlines sectors off-limits to foreign investors.

To free up more funds for lending and back up the real economy, the central bank had cut the cash that banks have to hold as reserves three times over the past year and guided borrowing costs lower. On the first day of 2020, China decided to cut the reserve requirement ratio (RRR) for financial institutions by 50 basis points from Jan 6, releasing about 800 billion yuan ($114.6 billion) of long-term liquidity for social financing.

The growth story is far from over

The World Bank forecast that China's economic growth will settle at 5.9 percent in 2020, while growth among advanced economies including the United States, the euro area and Japan is projected to undergo a drop to 1.4 percent in 2020 from 1.6 percent in 2019, circumscribed by softness in manufacturing and the lingering negative effects of US tariffs.

Washington-based International Monetary Fund predicted last October that China's GDP will grow at a rate of 5.8 percent in 2020 and downgraded its 2020 forecast for the "precarious" global economy to 3.4 percent.

"You won't expect any of the economies, whatever the size, to grow continuously at 10 percent or seven percent or eight percent ... So, I think, we are talking about growth with better quality, higher sustainability. 5.8 percent, or any number in that neighborhood, I think is reasonable," according to Zhang Tao, IMF's Deputy Managing Director.

The expert explained that China is restructuring its economy to expand more sustainably, relying less on debt and more on domestic consumption to fuel growth, which would translate in slower but better-quality growth.

Although some of the issues being mooted in the trade relationship are still on the table, a topsy-turvy 2019 led to a phase one deal at length — China and the US sealed a hard-fought agreement on Jan 15 to halt their protracted trade war, which is hailed by the US Chamber of Commerce as "very positive development."

Some US companies are still pressing ahead with their business plans in China while waning market sentiments is enveloped in dark clouds. Delta Air Lines is one of the several major American carriers operating in the country. Although the current trade spat has taken a toll on some of its routes — at least in the short term — it is still bringing new aircraft into operation and upgrading services, signaling confidence for the future.

Wong Hong, president of Greater China and Singapore region of Delta Air Lines, said, "As China spells lots of potential, we believe that China can offer. Despite the current market conditions, we see this rising middle class as a real force as far as the demand is concerned. In the long term, we believe we need to be able to capture and serve this customer well."