China’s economic growth hit a multi-decade low after 2019 numbers showed Beijing struggling to maintain its forecasts amid an ongoing trade war with the U.S.
Growth hit 6.1 percent for 2019, down from 2018’s 6.6 percent and the lowest growth rate since 1990. A government report cited increasing “downward pressure” and “instability sources and risk points” as the reasons behind the decline.
Despite tariffs dominating much of the publicity surrounding the trade war, a fall in consumer confidence and a weakness in consumption hurt the Chinese economy. Large household purchases fell sharply, with auto sales decreasing 9.6 percent, the second-straight year of decline.
While the economy remained within the Communist party’s official target of 6 to 6.5 percent, the International Monetary Fund and private sector forecasters project even lower growth for 2020.
An annual report in November showed that over 1 in 10 financial firms in China are at a “high risk” of going bankrupt.
But the phase-one trade deal signed between the U.S. and China on Wednesday could signal a rebound for the Chinese.
The deal includes China’s agreement to purchase $200 billion worth of U.S. goods over two years, including $40 billion in agricultural products. The U.S. will ease off on some tariffs, but duties on $250 billion in Chinese goods will remain.
“Sluggish global growth will continue to challenge the external outlook, but we expect the phase one deal with the U.S. to have a favorable impact on exports and support domestic sentiment and confidence,” said Louis Kuijs of Oxford Economics in a report.