China’s 4Q18 GDP Grows 6.4% in-line with Expectation, Economic Stimulus Plan is Expected

The report on Monday morning showed slower growth of China’s economy in the fourth quarter of 2018 at 6.4%, shrunk from the previous quarter by 0.1%.

The slower pace has been expected by analysts while the growth rate was in line with expectations, but the message was clear that the second-largest economy has begun to slow down.

The data published by the National Bureau of Statistics sent fear to investors, showed that the September-December growth rate was the weakest expansion since the financial crisis. Moreover, China’s economic growth in 2018 was held to 6.6%, the slowest in 28 years.

Chinese policymakers are expected to ramp up support for the economy this year to avert a sharper slowdown but analysts say activity may not stabilize until summer, adding pressure on Beijing to strike a deal with Washington to end their trade war.

 

Earlier, China reported a 17% growth in trade surplus with the U.S. to hit ฿323.32 billion in 2018, the highest since 2006 despite the ongoing trade dispute between both countries. Analysts believed that the high growth in both exports and imports in 2018 from China was due to the majority of the deals were made before the increment on tariff went into effect.

The effect from trade dispute showed on China’s global exports in December, which fell 4.4%, compared to 2017 with lower demand from major markets. Meanwhile, imports also saw a shocking drop by 7.6%, indicated the biggest decline since 2016. China exports to the U.S. plunged 3.5% in December while its imports from the U.S. were down 35.8% as well.

 

However, Asia markets were still afloated in the morning session on Monday, January 21, 2019, as the slowdown in China’s economy is what investors have been expecting while other sectors have better performance. China’s retail grew 8.2% YoY, a little above the expectation at 8.1%. The production from industrial sectors for December rose 5.7% YoY, higher than the expectation at 5.3%.
The data showing China’s economy slowdown will raise positive sentiment, expecting Chinese government to announce an economic stimulus plan in the first half of 2019 which will boost the economy in Asia to recover and perform better than developed market from the second half of 2019 onward.