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China growth to slow down in 2019 on slumping domestic demand, tariff concerns

A Reuters poll suggests that China’s economy might slow to 6.3% in 2019 due to weakening domestic demand. The US tariffs added to the Asian countries woes.

This expected growth of the Chinese economy would be the lowest in 2018.

The economy was expected to grow 6.6% in 2018, while it grew 6.9% in 2017.

With talks between the US and China resuming, many have been optimistic about a further suspension in planned tariff hikes which was expected this month.

China Economy 2019
Beijing, China (Courtesy: Raj Eiamworakul)

While 2018 started off very good for the world’s second-largest economy, but borrowing costs soared later in the year with lending becoming risky, making it hard for small businesses to receive funding. This led to default in bonds.

Soon the US tariff crisis caught up, which was a hit to Chinese trade.

While there is optimism on the issue, the trade dispute does not seem to agree on a deadline by March.

Even if an agreement is reached, the market expects it only to offer a slight relief to the Sino economy. It is still up to China to bolster its domestic investment and demand.

Analysts also say that with domestic headwinds remaining strong, the economy is expected to soften further.

In the fourth quarter of 2018, growth fell to 6.4%. It was 6.8% in the first quarter.

China is expected to post its fourth quarter and 2018 GDP growth next week, on January 21.

However, with regulators fast-tracking infra projects, investments have seen moderate growth. Yet, retail sales growth has hit lowest since 2003 and the property sector is also in dire straits.

While China has been looking to many measures to boost its growth, the slowdown has not been arrested. Now all eyes are on Beijing to roll out something to avert further slump in the economy.

 

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