Trade war and debt reduction by regional governments take toll
BEIJING — China’s economy grew at its slowest pace in 28 years in 2018, with gross domestic product expanding 6.6%, down 0.2 percentage point from the previous year, according to data released Monday by the country’s National Bureau of Statistics.
//NOTE: Growth of 6.6% (Lowest in 28 years) still exceeds expectations of 6.5%//
Despite the slowdown, the growth rate for 2018 exceeded the target of about 6.5% set by the Chinese government. The economy grew faster in 2017 for the first time in seven years, but slowed again in 2018.
The growth rate was 6.4% in real terms on the year in the October-December period of 2018. It was down 0.1 of a percentage point from the July-September period, marking a slowdown for the third consecutive quarter below or equal to 6.4% for the first time since January-March 2009, just after the collapse of Lehman Brothers Holdings.
The U.S. and China imposed additional tariffs of up to 25% on each other in July-September. Chinese products worth a total of $250 billion were affected by the additional U.S. tariffs, and exports to the U.S. fell for these products. As the impact of the trade war became clear, both consumption and production have shown steep declines since autumn.
There may be some improvement in the second half as the government has already announced support measures, including monetary easing, large tax cuts and an expansion of infrastructure investment, but the surge could be temporary.