Workers at the production line of lithium-ion batteries for electric vehicles (EV) can be seen at a factory in Huzhou, Zhejiang province, China.
Reuters
BEIJING – China’s National Bureau of Statistics revised its national growth rate for 2019 lower Wednesday with major cuts in the manufacturing sector.
The downward shift gives the country a lower base for reporting growth for 2020.
GDP last year rose only 6.0% to 98.65 trillion yuan ($ 15.1 trillion), compared to 6.1% as previously reported, the bureau said.
The main reason was largely a decrease of 503.8 billion Yuan ($ 77.15 billion) in manufacturing, or about 2% of the sector’s initial contribution for growth in 2019.
“This suggests that the impact of the U.S.-China trade war on China’s manufacturing activity has been underestimated,” Yue Su, chief economist at the Economist Intelligence Unit, said in a statement.
Trade tensions between the world’s two largest economies began to pick up in 2018, with a freeze rising next year as both countries imposed tariffs on goods from the other and the US overtook China’s leading technology companies on blacklists. The two countries reached a temporary ceasefire with the signing of a stage one trade agreement in January 2020.
The Bureau of Statistics made the highest adjustments in terms of tertiary industry, or services, with information dissemination, software and IT services rising 70.2 billion Yuan.
China regularly reviews its GDP figures, often near the end of the year. There is much skepticism about the statistical inaccuracy as local governments tend to be politically pressured to meet pre-determined growth targets.
This year, in the wake of the coronavirus outbreak, the Chinese central government made a rare decision not to announce a GDP growth target. Analysts generally expect growth of around 2% by 2020.
To Bruce Pang, head of macro and strategy research at China Renaissance, the dramatic shift is down to the secondary industry, or manufacturing, in line with efforts to reduce that industry’s share of total GDP.
Such a reduction in last year’s figure will also help “clarify and quality” economic growth figures for the next few years, Pang said, according to CNBC’s translation of his Chinese comments.