GDP grows 6.6% in 2018

By Li Xuanmin Source:Global Times Published: 2019/1/21 21:18:39

Economy expands by $1.18 trillion, equivalent to Mexico

A man walks inside a luxury brand shop in Beijing on Monday. China's GDP growth in 2018 ranked No.1 among the world's five largest economies  and contributed about 30 percent to global economic growth, making China the largest contributor of global economic growth. Photo: AFP

A young woman fails to grab a teddy bear in a game shop in Beijing on Monday. Photo: AFP

Vendors wait in a shopping mall on Monday. Photo: AFP

China's GDP averaged 6.6 percent growth in 2018, landing 0.1 percentage point above the annual target of 6.5 percent set by officials in 2017. 

The steady growth, although touching a 28-year low amid government efforts to shift from quantity-led to quality-driven growth, still makes China a leading economic powerhouse in the world and provides a clue on how its soaring demand at home could serve as a cushion to aid Beijing in weathering the impact of a lingering trade war with Washington, observers said. 

Overall in 2018, China's GDP grew 6.6 percent to 90.03 trillion yuan ($13.25 trillion), according to data released by the National Bureau of Statistics on Monday. In the first three quarters, China's economy grew 6.7 percent year-on-year. GDP grew 6.4 percent in the fourth quarter, according to the bureau.

China's headline GDP growth in 2018 ranked No.1 among the world's five largest economies - US, China, Japan, Germany and the UK - and contributed about 30 percent to global economic growth, making China the largest contributor of global economic growth, bureau head Ning Jizhe said at a press conference hosted by the State Council's Information Office on Monday.

While some Western media outlets have been boasting about China's slowest growth rate since 1990 and citing damage inflicted by the trade war with the US as a key reason, Chinese economists hailed 6.6 percent growth as high-speed expansion on the global stage.

Global major economies were projected to grow 3.9 percent on average in 2018, according to a July International Monetary Fund report.

In terms of the sheer size of expansion, China's GDP surged about 8 trillion yuan ($1.18 trillion) in 2018, the equivalent of Mexico's 2017 GDP of $1.15 trillion, the world's 15th largest economy. 

The Chinese economy also seems to eclipse Western countries such as the US. In the third quarter of 2018, US GDP posted a revised 3.4 percent year-on-year growth, with analysts predicting the full-year growth to be lower than 3 percent. 

The US now trails China as the second-largest contributor of global economic growth, contributing about 15 percent. 

China "lent the crown" of world's fastest-growing major economy to India, which posted GDP growth of 7.1 percent in the third quarter of 2018. 

China "has an optimized economic structure as well as a five-time larger output" compared to its Asian neighbor, Tian Yun, vice president of the Beijing Economic Operation Association, told the Global Times on Monday. 

"India is still grappling with issues in the early stage of industrialization, while China has been moving from quantity to quality growth." 

Economic resilience

Ning stressed at the press briefing that China's "slowing but stabilizing" economy was "by no means easy to achieve" against a batch of downturns in 2018 including weaker global demand, drastic fluctuations in bulk commodity prices, rising protectionism and unilateralism.

Together these factors ramped up pressure on China, whose foreign trade accounts for nearly one-third of its GDP, Ning noted. 

"China's trade dispute with the US has affected the domestic economy, but the impact was manageable," he said. 

How did China smoothly navigate troubled waters last year? 

Highlights from freshly released economic indicators could restore investors' confidence and point to China's new economic drives from massive domestic consumption power and rising investment.  

As government efforts to stabilize investment kicked in, the year-on-year reading for China's fixed-asset investment picked up to 5.9 percent in 2018. The increase rate is 0.5 percentage point faster than the first three quarters, official data showed. Private investment also surged 8.7 percent in 2018, up 2.7 percentage points from 2017. 

China's consumer market also outpaced any other country in the world. 

In 2018, China's retail sales of consumer goods rose 9 percent year-on-year to 38.099 trillion yuan. Final consumption contributed to 76.2 percent of China's GDP growth, up 18.6 percentage points from 2017, according to the bureau. 

"Chinese consumers are going abroad to buy kitchenware in Germany and toilet lids in Japan. They have the consumption power," said Cong Yi, a professor at the Tianjin University of Finance and Economics. 

"The main pressure now is how to stimulate domestic demand and unleash market potential via deepening economic reforms as well as how to prevent the government's counter-cyclical adjustment from creating new bubbles in the property and stock markets," he said.  

Confidence in 2019

Ahead of the much-anticipated GDP statistics on Monday, the central government unveiled stimulus measures including tax cuts and a reduction of banks' reserve requirement ratio to boost domestic consumption.

Chinese policymakers at the press conference voiced confidence in maintaining a reasonable economic growth rate in 2019. 

Ning said their confidence stemmed from not only consumption power at home, with a middle class of more than 400 million, but also an industrial upgrade involving new growth engines, innovative technology and breathing room for flexible policy adjustments.

Authorities are scheduled to release China's proposed GDP target for 2019 in March at the annual sessions of China's top legislative and advisory bodies. 

"Without the trade war, China could achieve an 8 percent GDP growth rate if it fully taps its potential," Cong said. "But even if the trade disputes with the US persist, China could still post a GDP growth rate between 6 percent and 7 percent this year."

If China's GDP could maintain a 6 percent growth rate over the next three years, China would join the "high-income club, or GDP per capita of about $12,500, around 2022, according to a report by a Tsinghua research team led by former central bank advisor Li Daokui released over the weekend.

In 2018, China's GDP per capita - a closely watched measure of economic output - stood at about $9,500. 

The reading is kind of in the middle, yet still below what some top officials expected to jump above a key level of $10,000, and is also significantly behind that of developed countries. 

"China's road to joining the 'high-income club??could be long and littered with challenges, Cong said.

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