China’s economic growth prospects for 2019 appear to have received a rude setback right at the outset. Data recently released by its National Bureau of Statistics (NBS) for the last quarter of 2018 report that economic growth, at 6.4 percent year-on-year, has reached a 28-year low. With this, growth for 2018 amounts to 6.6 percent, barely scraping by the politically mandated minimum of 6.5 percent. Moreover, scrutiny of the December data and China’s available policy responses reveal troubling portents for its economy in 2019.
Retail sales, for instance, made only a feeble recovery in December 2018, rising to 8.2 percent year-on-year, from 8.1 percent in November 2018. More importantly, growth in retail sales has been slowing fairly consistently over the last two years. With final consumption expenditure said to have accounted for 76.2 percent of China’s GDP growth in 2018, the effects of a protracted slowdown in retail sales in 2019 would discernibly stifle economic growth. Meanwhile, demographic pressures are adding to China’s consumption woes — births fell by a sizeable 2 million in 2018, reaching the lowest level since the years of the Great Leap Forward.