Workers are seen on the production line of lithium-ion batteries for electric vehicles (EV) at a factory in Huzhou, Zhejiang province, China.
Reuters
BEIJING – China’s National Statistics Office revised the national growth rate for 2019 down on Wednesday, with major cuts in the manufacturing sector.
The downward adjustment gives the country a lower base for reporting growth for 2020.
Last year’s GDP grew just 6.0% to 98.65 trillion yuan ($ 15.1 trillion), against 6.1% as previously reported, the bureau said.
The main reason, by far, was a reduction of 503.8 billion yuan ($ 77.15 billion) in the industry, or about 2% of the sector’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,” said Yue Su, chief economist at The Economist Intelligence Unit, in a statement.
Trade tensions between the world’s two largest economies began to increase in 2018, with friction increasing in the following year as the two countries applied tariffs on each other’s products and the U.S. blacklisted major Chinese technology companies. Both countries reached a temporary truce with the signing of the first phase trade agreement in January 2020.
The Bureau of Statistics made the biggest changes in the tertiary sector, or services, with the transmission of information, software and IT services increasing by 70.2 billion yuan.
China regularly reviews its GDP figures, usually at the end of the year. Many doubt the accuracy of the statistics, as local governments typically face political pressure to meet predefined growth targets.
This year, in the wake of the coronavirus pandemic, the Chinese central government made the rare decision not to announce a GDP growth target. Analysts generally anticipate a growth of around 2% in 2020.
For Bruce Pang, head of macro and strategic research at China Renaissance, the major downward adjustment in the secondary, or manufacturing, industry is in line with efforts to reduce that industry’s share of overall GDP.
This reduction in numbers from last year also helps in the “brightness and quality” of economic growth figures for the coming years, said Pang, according to a CNBC translation of his comments in Chinese.