By Kevin Yao
BEIJING (Reuters) – On Monday, China is expected to report that its growth cool to its lowest level in 28 years in 2018, due to domestic demand weakness and tariff effect & # 39, the United States, increasing pressure on Beijing to implement more supportive measures to prevent further decline.
growing signs of weakness in China, which generated almost a third of global growth over the past decade, are urging concerns about risks to the global economy and the burden on corporate profits, a Apple (NASDAQ 🙂 by major car manufacturers.
Chinese legislators have pledged more support for the economy this year to reduce the risk of & # 39; & # 39 great loss; jobs, but excluded "flood" of & # 39; stimuli such as arising from Beijing in the past, rapidly accelerated the growth rates but left mountains & # 39; debt.
Analysts polled by Reuters expect the second largest world economy grew 6.4 percent in the quarter from October to December compared with the previous year, failed pace of 6.5 percent previous quarter and reached a level observed in early 2009 during the global financial crisis.
This brings the growth of gross domestic product (GDP) in 2018 to 6.6 percent, the lowest level since 1990 and down from a revised 6.8 percent in 2017.
Because the measures & # 39; stimulus are expected to take a few, analysts believe that the conditions in China X & # 39; likely to worsen before improving, and the economy will fail to 6.3 percent this year. Some analysts believe that the levels of real growth are already much weaker than official data suggest.
Even if China and the United States to reach trade agreements during the current talks, which seems a difficult task, analysts said it would not be a panacea for the Chinese economy unless Beijing can not & # 39; resolving investment and weak consumer demand.
Chen Xingdong, chief economist of China BNP Paribas (PA :), said the m & # 39 investors, should expect that the latest round & # 39; stimulus produces results similar to those of the global crisis of 2008-2009, when the huge package & # 39 ; expenditure & # 39; Beijing boosted rapid growth.
"What China can & # 39; really do this year is to avoid deflation, recession and a hard landing in the economy," said Chen.
On a quarterly basis, growth probably slowed to 1.5 percent in & # 39; October-December from 1.6 percent in the previous period.
China will publish GDP data for the fourth & # 39; quarter and 2018 on Monday (0200 GMT), with production factory for December, retail sales and investment in & # 39; fixed assets.
As the reading of the quarterly GDP of China tends to be unusually stable, the majority of investors prefer to focus on recent trends.
The surprising contraction in & # 39; December of trade data and indicators & # 39; the factory activity in & # 39; recent weeks suggested that the economy is cooling faster than expected at the end of & # 39; 2018, and in ħallitha & # 39; unstable position at the beginning of the new year.
Sources told Reuters that Beijing planned to reduce its growth target of between 6 and 6.5 percent this year from about 6.5 percent in 2018.
The slight expansion of industrial production and lower consumer spending are reducing margins & # 39; profitability of companies, discourage new investments and increase the risk of & # 39; further loss of & # 39; employment.
Some factories & # 39; Guangdong, the center & # 39; China export, closed earlier than usual holidays Lunar New Year because the tariff war with & # 39; US cut orders. Other suspending lines & # 39; production and reduce working hours.
If the trade war is prolonged, it is possible that some migrant workers do not work with their return.
The trade negotiators face initial deadline & # 39; March and Washington has threatened to raise tariffs by & # 39; drastic if there are no significant signs of & # 39; progress.
Estimates are expected
S & # 39; now, Chinese politicians have accelerated the construction projects and reduced some taxes and tariffs on imports to stimulate demand.
To release more funds for loans, particularly for smaller and more vulnerable companies, the central bank reduced the amount of & # 39; funds that banks must allocate the reserves (RRR) five times during the year last, and also reduced the reference to financing costs.
Further reduction in bank reserves is expected in the coming quarters, but many analysts still see a reduction in interest rates, as those responsible for monetary policy to wait to see if they start earlier steps to stabilize the situation. Reducing more b & # 39; & # 39 his health could, put pressure on the yuan and exacerbate high levels of & # 39; debt, and the money goes to less efficient or speculative investments.
Analysts say that the government can disclose more fiscal stimulus measures during the annual meeting of parliament in March, including more tax cuts and more spending on infrastructure projects.
Some observers in China believe that the government could provide tax breaks and tariffs of 2 trillion yuan ($ 295.13 billion) this year, and allow local governments stand another 2 trillion yuan in special bonds mainly used to finance major projects.
However, some analysts do not expect the economy hit bottom b & # 39; convincing way by summer.
(Information from Kevin Yao, edited by Kim Coghill, translated by Andrés González)