Chinese growth plunges to lowest in three decades

beijing — China’s economic growth sank to its lowest level in three decades in 2016 as Beijing braces for a trade battle with US President Donald Trump.

Growth in the quarter ending in December ticked up to 6.8 per cent over a year ear- lier, supported by government spending and a real estate boom, up from the previous quarter’s 6.7 per cent, government data showed on Friday.

Still, for the full year, growth came in at a lacklustre 6.7 per cent, down from 2015’s 6.9 per cent and the weakest since 1990’s 3.9 per cent.

Economists said that temporary strength was unlikely to last and the economy should cool further. “We expect clearer signs of a renewed slowdown to emerge during the next couple of quarters,” said Julian Evans-Pritchard of Capital Economics in a report.

China’s economy has cooled steadily as communist leaders try to nurture domestic consumption and reduce reliance on trade and investment but trade still supports millions of jobs. Government spending and a surge in real estate sales last year helped offset a 7.7 per cent plunge in exports, but analysts expect the economy to cool further.

Exports could face more pressure, raising the threat of politically dangerous job losses, if Trump goes ahead with promises to raise tariffs on Chinese goods.

In an implicit rebuke to Trump, Chinese President Xi Jinping emphatically defended free trade in a speech on Tuesday at the World Economic Forum in Switzerland. He said a “trade war” would harm all countries involved.

Still, a member of the Cabinet’s economic planning agency on Friday expressed confidence.

“I am hopeful that after his election, President Trump will consider the issue from the angle of mutual benefit and win-win and will develop the long-term, cooperative ‘big country’ relations that have been formed between China and the United States,” Ning Jizhe told reporters.

Asked about the potential impact of action by Trump, Ning said China should maintain “medium to high-speed growth.”

Beijing has relied on repeated infusions of credit to prevent activity from slumping too fast, prompting warnings the run-up in debt could spark a financial crisis or drag on growth. Chinese leaders have cautioned the economic outlook is “L-shaped,” meaning once the downturn ends, growth is unlikely to rebound.

Looking at quarter-on-quarter growth, the way other major economies report data, the economy cooled steadily over the course of the year despite the headline figure showing steady expansion. Growth fell to 1.7 per cent in the last quarter, down from 1.8 per cent in JulySeptember and 1.9 per cent in the previous quarter. — AP