China, the world’s second largest economy, grew at its slowest rate since 1990 last year, igniting fears of a significant knock-on effect on the global picture.
Overall, China grew 6.6 per cent in 2018, and state media put a positive spin the figures.
“In the midst of a complex external environment, China’s economy has ended 2018 on firm footing, with better quality and improved structure,” the state news agency Xinhua said in its report on the data.
The figures are solid enough, and many countries would be delighted with such rates of expansion. However, for international investors used to a picture of constant impressive growth, the data underline growing concerns about how the country will deal with its increasingly cumbersome debt pile and the impact of the US-China trade conflict.
Export-focused sectors, which had rushed to get orders in before the trade war started to bite, are now starting to feel the pain of Donald Trump’s trade war.
To get a true picture, the key is to separate the headline figures from the data relating to sectors most affected by the spat between Beijing and Washington DC. Two of the sectoral icons of China’s economic rise have been autos and smartphones.
Earlier this month China racked up the first annual slump in car sales in more than two decades. The world's biggest auto market saw sales fall 6 per cent to 22.7 million units last year, according to the China Passenger Car Association.
By some estimates, falling car sales account for over half the total economic slowdown.
Various researchers have put the decline in smartphone sales in China in the third quarter of last year as anything between 8 per cent and 15 per cent.
"While we anticipated some challenges in key emerging markets we did not foresee the magnitude of the economic deceleration, particularly in greater China," Apple CEO Tim Cook said in a recent letter to investors to explain why it was not selling as many smartphones in China.
Smartphones may have exemplified China’s rise, but also illustrate acutely the challenges the economy is facing. While the trade war was a factor in slowing growth for smartphones, it is also increasingly a saturated market.
