You need a machete to cut through the tangled numbers of China’s data jungle to catch a glimpse of the true state of the world’s second-largest economy.
Since the third quarter of 2018, the statistics have been depressing, culminating in figures highlighting a distinct slowdown.
In January, the National Bureau of Statistics announced that GDP growth for 2018 slowed to 6.6%, a level not seen since 1990, as manufacturing stalled and consumer spending dipped.
Smartphone shipments also dropped while car sales plunged 5.8% last year to 22.35 million vehicles. This was the first annual decline since 1990.
But the first real snapshot of the Year of the Pig came earlier this week when the Ministry of Commerce and the statistics bureau reported sluggish sales growth for the Chinese festive period.
During the seven-day holiday, consumers spent 1.01 trillion yuan (US$148.96 billion) at restaurants, shopping centers and online outlets. Even though that was an 8.5% increase compared to last year, it was still the slowest rate of growth since at least 2011.
“The data represents a continuation of consumption slowdown in China starting from the second half of 2018,” Shenwan Hongyuan, an investment management company in Shanghai, wrote in a research note. “[Based on the readings], we expect the country’s retail sales in January and February this year will grow around 8%.”
At this stage, that figure might be optimistic.
A day after the numbers were announced, a Chinese media report revealed that more than half the country’s provinces failed to hit GDP growth targets last year.
The next 12 months could be just as challenging, especially if Washington and Beijing fail to resolve the trade war.
Peace talks are continuing this week and the downturn in China’s economy will not be lost on the hawks inside US President Donald Trump’s administration.
Moreover, the Ministry of Commerce reported on Tuesday that growth in consumer spending would again be squeezed this year.
“The medium- to long-term accumulated contradictions and risks throughout economic development are going to become more prominent in 2019,” Wang Bin, a Ministry of Commerce official, told a media briefing. “The pressure facing the consumer market will increase and consumption growth is very likely to slow further.”
In a move to reverse the trend, President Xi Jinping’s government has rolled out a raft of measures to stimulate the economy. They include tax cuts across the board, an overhaul of state-owned enterprises and financial support for struggling small- and medium-sized companies in the private sector.
Despite being major employers, they have been starved of funding by leading state-owned banks.
Last month, Xi warned of the dangers of failing to avoid risks which could jeopardize economic stability.
“[We are] confronted with unpredictable international developments [such as the trade dispute] and a complicated and sensitive external environment. Our task is to maintain stability as we continue our reform and development,” he told senior Communist Party officials in Beijing, according to China’s official news agency Xinhua.
Stabilizing consumer spending, which is a massive driver of GDP growth, is likely to become a priority in the weeks and months ahead.