Weakness in the service and farm sectors slowed China’s economic growth in the fourth quarter, despite a strong pickup in construction activity, official data showed yesterday.
Services grew 7.4% from a year earlier, slowing from 7.9% in the third quarter, while growth in agriculture slowed to 3.5% from 3.6%, the National Bureau of Statistics (NBS) said.
The sector-by-sector breakdown follows release of headline GDP figures on Monday that showed China’s economy in the last quarter expanded at its slowest rate since the global financial crisis due to faltering domestic demand and an ongoing trade war with the United States.
The services sector accounted for almost half of gross domestic product in the quarter by value as China continued to transition towards a service-oriented economy, while agriculture contributed about 10%, according to Reuters’ calculations based on the latest data.
Services suffered a broad-based slackening from real estate to tech, as these industries braced for more cautious investor lending and softer consumer demand.
Growth in real estate services slowed to 2% year-on-year in the fourth quarter from 4.1% a quarter earlier, as government tightening measures to curb speculation and skyrocketing prices subdued overall demand.
The sector contributed 6.4% to GDP in the quarter.
The retail and wholesale sector slowed to 5.5% from 6.2% as consumption of physical goods lost momentum.
Auto sales in the world’s biggest car market shrank for the first time in 2018 since the 1990s.
Though retail sales growth picked up marginally in December to 8.2%, the consumer strength gauge is around the weakest in 15 years.
“With consumer confidence now trending down and the labour market set to weaken further, we think households will turn even more cautious in the coming months, weighing on service sector growth,” Capital Economics wrote in a note yesterday after the data release.
Having been a stellar performer benefiting from supportive policies, the tech sector still grew at double-digit rate but growth slowed to 29.1% in the fourth quarter compared with 32.8% in the third.
It accounted for about 3% of GDP in the fourth quarter.
As fears for a sharp slowdown mounted amid uncertainties over whether the trade war will be brought to an end any time soon, Beijing has been drumming the message that it has plenty of room to deploy measures to spur economic growth.
Finance was one of the few bright spots in the service sector thanks to recent government stimulus measures to keep liquidity ample.
Construction enjoyed a strong recovery thanks to support for infrastructure projects, as the government frontloaded local government bond issuance to support their financing.
The sector – accounting for 8% of the economy – grew 6.1% in the fourth quarter, accelerating from the previous quarter’s 2.5% growth.
But in a surprising remark, Fang Xinghai, vice-chairman of China’s Securities Regulatory Commission, told a seminar in Davos that he expected economic growth to slow to 6% this year from 6.6% in 2018, stressing China’s slowdown won’t be a “disaster”.
A man walks through a used car sales yard in Beijing. China’s economy grew at its slowest pace in almost three decades in 2018, losing more steam in the last quarter as it battles a massive debt pile and a US trade war, official data showed yesterday.
