China’s GDP grew 6.0% yoy in Q4, matched market expectations. Overall growth in 2019 was at 6.1%, slowed from 2018’s 6.6%. That’s the slowest annual growth since 1990. In December, industrial production grew 6.9% yoy, above expectation of 6.2% yoy, strongest pace in nine months. Retail sales rose 8.0% yoy, above expectation of 7.9% yoy. Fixed asset investment rose 5.4% ytd yoy, above expectation of 5.2%.
The set of data suggests stabilization in the Chinese economy. Yet, there is question regarding the sustainability, not to mention the chance of a rebound. US-China trade deal phase one should provide some short-term support. But uncertainties lie in the medium to long term we core issues to be resolved with the US in phase two negotiations. At the same time, large chunk of the tariffs remains in place.
EU Chapuis: Managed trade, quantitative targets, bilateral deals are not what a global world needs
Nicolas Chapuis, EU ambassador to China, said “the fact that trade tensions may be reduced, thanks to the U.S.-China deal is good news”. China’s promises on intellectual property issues will benefit other trading partner as well.
However, he warned that “managed trade, quantitative targets, bilateral deals” are “not what a global world needs.” “We do not like bilateral arrangements in globalization. Of course, the U.S. is entitled to any deal it wishes with China. But if it is not WTO compatible, then we have an issue”, he added.
Also, EU is taking a “different approach” than the US with China. Chapuis said “we think that policy of engagement, clarity, the possibility to strike smart deals, to take stock of China’s innovation policies and formidable economy of this country is of interest to us and engagement rather confrontation is the right path.”