Chinese economy grew at slowest rate since 1990 in 2018 as hopes for US trade deal persist

China’s economy grew at its slowest rate since 1990 in 2018 as demand lessened and trade tariffs imposed by the US continued to bite.

GDP growth eased to 6.4 per cent from 6.5 per cent in the third quarter, the National Bureau of Statistics said today, dragging full-year growth to 6.6 per cent, the slowest annual rate in nearly three decades.

Read more: Stock markets slide as Chinese data reveals impact of US-China trade war

The weakness underlines concerns among analysts about a cool-down in the world’s second largest economy, with the trade war with the US hitting car manufacturers and Apple warning in recent weeks weakness in China would hit its sales.

China’s banks have already introduced an economic stimulus in the form of cutting the amount of reserves banks need to set aside five times over the past year, and lowering the cost of borrowing.

Fixed-asset investment rose 5.9 per cent last year, the slowest in 22 years, as regulators cracked down on riskier financing and debt held back local government spending.

The bright spot in the results came in factory output, which spiked unexpectedly to 5.7 per cent, higher than the 5.3 per cent anticipated by analysts.

Despite the slipping figures, Asian markets were optimistic of a resolution to China’s trade war with the US, with Tokyo’s Topix index and the Shanghai Composite both up 0.56 per cent.

Hussein Sayed, chief market strategist at foreign exchange trader Forex Time, said: “It seems the only way for China to prevent a hard landing is to reach to a deal with the US, and that’s what the markets are hoping for.”

Others were sceptical about how frank China had been in its results statement, with analysts at Pantheon claiming a retail sales value growth of 8.2 per cent was “lacking credibility” against the backdrop of inflation slowing to 1.9 per cent in December from 2.2 per cent the month before.

Read more: US stocks jump on renewed optimism of an end to the China trade war

“We find it hard to get onboard with the uptick,” they said. “The headline growth rate remains way above that calculated from the underlying levels data. It is adjusted for sampling distortions, but no details are provided on how this is achieved. The underlying data suggest no pick-up in growth.”

They also said China’s growing factory output was “out of whack” with recent PMI surveys, which “told a very different story”, contracting for the first time in two years in December.