Workers are seen at the production line of lithium-ion batteries for electric vehicles (EVs) at a factory in Huzhou, Zhejiang Province, China.
Reuters
BEIJING – China’s National Bureau of Statistics on Wednesday revised its national growth rate for 2019 with major reductions in the manufacturing sector.
The downward adjustment provides the country with a smaller base from which to report growth for 2020.
GDP last year has now grown by just 6.0% to 98.65 trillion yuan ($ 15.1 trillion), up from 6.1% as previously reported, the office said.
The main reason was by far a 503.8 billion yuan ($ 77.15 billion) reduction in output, or about 2% of the sector’s initial 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 intensify in 2018, with friction rising the following year, as both countries applied tariffs on goods from the other and the US blacklisted major Chinese technology companies. Both countries reached a temporary armistice with the signing of the Phase 1 trade agreement in January 2020.
The statistics office made the biggest upward changes in the tertiary or services sector, with information transmission, software and IT services up 70.2 billion yuan.
China regularly revises its GDP figures, often towards the end of the year. Many doubt the accuracy of the statistics, as local governments usually face political pressure to achieve pre-set growth targets.
This year, due to the coronavirus pandemic, the Chinese central government has made a rare decision not to announce a GDP growth target. Analysts generally expect growth of about 2% in 2020.
For Bruce Pang, head of macro and strategic research at China Renaissance, the great downward adjustment of the secondary or manufacturing industry is in line with efforts to reduce the proportion of this industry in global GDP.
Such a drop in last year’s figure also helps to “shine and quality” economic growth figures for the next few years, Pang said, according to a CNBC translation of his Chinese comments.