China economy grows at slowest pace in 28 years

Trade war and sluggish domestic consumer demand hurt growth in 2018.

Men work on a production line manufacturing robotic arms at a factory in Huzhou, Zhejiang
Economic activity suffered a sharp drop in the fourth quarter of last year [Reuters]

China’s economy expanded by 6.6 percent last year, according to official data. That’s the slowest growth rate in 28 years. The figure released on Monday was in line with many economists’ forecasts. 

Economic activity slowed sharply in the fourth quarter of 2018 as China and the United States engaged in a trade war. 

A cooling Chinese economy could hurt companies from iPhone maker Apple in the US and carmakers in Europe to mineral exporters in Australia. 

Economists say Beijing has to achieve a balance between stimulating the economy while keeping debt levels from going out of control.

“Deceleration from 6.8 percent is undeniably sharp, and more worrying, set against the backdrop of US-China trade friction and the tech sector down-cycle,” Vishnu Varathan, head of economics and strategy for Asia at Mizuho Bank in Singapore, told Al Jazeera.

But there were some signs of resilience in the world’s second biggest economy. Industrial output grew 5.7 percent in December from a year earlier, beating expectations of 5.3 percent.

The US and China are due to hold the next round of talks in Washington, DC on January 30 to try and resolve their trade dispute after the US imposed tariffs on $250bn worth of Chinese exports.

Source: Al Jazeera