China Had a Better-than-Expected Q4: Strong Headwinds ahead

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Image: Easyturn/iStock

Though China reported a better-than-expected 6.4% of year-on-year GDP growth in Q4, the full-year 6.6% expansion is the lowest since 1990.

Yet it’s still higher than the official pre-set target of 6.5%.

“Growth slowdown persists in Q4 despite the recent easing measures and positive signals of the China-US trade relation,” said BBVA Research in a statement.

Le Xia, chief economist for Asia at BBVA research said growth deceleration is the prime risk throughout 2019 although China and the US are likely to strike a deal to end the tariff war in March.

“Strong headwinds, including the faded effect of previous front-loading exports and dampened investors’ confidence, will prompt the authorities to deploy more easing measures on both monetary and fiscal fronts,” he pointed out.

BBVA Research maintains 2019 growth projection for China at 6% and 2020 at 5.8%.

Last October, the IMF has lowered its forecast for Chinese economic growth in 2019 to 6.2% from the original 6.4%

In December 2018, The World Bank revised its 2019 forecast of China’s GDP growth from 6.5% to 6.2%.

Other data in Q4

  • Industrial production accelerated from 5.4% to 5.7% year-on-year
  • Retail sales marginally picked up to 8.2% year-on-year from 8.1% previously
  • Fixed asset investment remained at 5.7% year-on-year
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