Workers can be seen at the lithium-ion electric vehicle (EV) battery production line at a factory in Huzhou, Zhejiang Province, China.
Reuters
BEIJING – China’s National Bureau of Statistics revised the national growth rate for 2019 lower on Wednesday with major cuts in manufacturing.
The downward adjustment gives the country a lower basis for reporting growth for 2020.
GDP now rose by just 6.0% last year to 98.65 trillion yuan ($ 15.1 trillion), up from 6.1% as previously reported, the agency said.
By far the most important reason was a 503.8 billion yuan ($ 77.15 billion) reduction in output, or about 2% of the industry’s original contribution to growth in 2019.
“This suggests that the impact of the US-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 escalate in 2018, and the following year friction intensified as both countries applied tariffs to goods from the other and the US blacklisted major Chinese technology companies. Both countries reached a temporary ceasefire with the signing of the Phase One Trade Agreement in January 2020.
The Bureau of Statistics made the biggest upward changes in the tertiary sector, or the services sector, with information transfer, software and IT services increasing by 70.2 billion yuan.
China regularly revises its GDP figures, often towards the end of the year. Many question the accuracy of the statistics, as local governments are usually under political pressure to meet predetermined growth targets.
This year, in the wake of the coronavirus pandemic, the central Chinese government made a rare decision not to announce a GDP growth target. Analysts generally expect growth of around 2% in 2020.
Bruce Pang, head of macro and strategy research at China Renaissance, said the major downward adjustment of the secondary or manufacturing industry is in line with efforts to reduce that industry’s share of total GDP.
Such a cut in last year’s figure also adds to the “clarity and quality” of economic growth figures for the coming years, Pang said, according to a CNBC translation of his Chinese commentary.