China reported today that its economy, although slowing to a 28 year low, is still growing at a 6.6 percent pace. Of course, this was the pace that it grew for the year 2018. Now some market experts are saying that it has slowed further – fourth-quarter GDP faded to 6.4 percent year-on-year from 6.5 percent in the third quarter according to China official reports. Note that the 2017 growth rate was 6.8 percent.
Although these numbers are official, some western analysts feel that the pace of economic expansion is slower, much slower. Have a look at the articles we produced on auto sales in China. Why is it slowing?
Let`s be crystal clear on how growth patterns fade over time. The Chinese economy will surely start to slow to 5.0% or lower as a natural process of a maturing economy – Japan saw 8.0 to 7.0 percent growth in the 1960s and 70s – but some are calling for China to slow to 4.0 percent or lower. Surely the numbers reported by the Communist Party will be somewhat better than reality, but with a country that large, exact numbers are challenging.
The waves of China news continues as the Industrial output release was at a solid 5.7% which was better than economists` expectations of 5.3 percent growth. The is December 5.7% level outpaced the November 5.4% level. These releases are sold but it is important to emphasize that the official government number for GDP has always been questioned by outsiders.
Still, the 6.6% pace of growth it the lowest since 1990 and with concerns of a lower number in 2019, given the trade war with the US, China will likely have a soft landing in its economy. Again, a slow move lower to 5.0% then lower is part of the natural path of growth in economics.