China's GDP slumps to 6.1% in 2019; lowest in 29 years

China's GDP grew by 6.1% last year, the lowest in 29 years, the government said on Friday, as weak domestic demand and the bruising 18-month trade war with the US took their toll on the world's second-largest economy.

The new data released by the National Bureau of Statistics (NBS) comes a day after China and the US signed a long-awaited phase one deal, marking a ceasefire in the 18-month-long trade war which saw the world's two largest economies slap 25% tariffs on about half a trillion-dollar worth of each other's exports.

The world's second-largest economy grew by 6.1% last year, its worst performance since 1990, but it remained above the psychologically important six% mark.

The GDP growth remained well within the 6 to 6.5 target set by the government, the NBS said.

However, significant from the Chinese government's perspective, the GDP expanded to USD 14.38 trillion from last year's $13.1 trillion.

In 2018, China's economy sank to a 28-year low slowing down to 6.6% year on year, lower than the 6.8% growth registered in 2017 as it grappled with the continued slowdown amid the trade war with US and declining exports.

There is a sense of relief among the officials here as the official growth rate remained above the psychologically important 6% as mandated by Chinese President Xi Jinping who in the past directed that GDP should not go down below six%, which could cause serious disruption to the world's second largest economy.

Chinese economy was hit hard by the US tariffs as a result of the trade war between the two countries.

After signing the phase one deal on Wednesday, US President Donald Trump said 25% tariff hike on USD 360 billion worth of Chinese products would continue until the phase-2 deal is worked out.

"The phase one deal is only an interim agreement between China and the US. In fact, to push for negotiation in the next stage, the US will keep existing tariffs on imports from China unless the two countries manage to reach a phase two deal," said Alicia Garcia Herrero,

chief Asia Pacific economist at Natixis.

"In the bilateral evaluation and dispute resolution chapter, the agreement also makes it clear that, if the concerns cannot be resolved, the two parties hold the right to suspend an obligation, adopt a remedial measure, or in the worst case, withdraw from the agreement," he told the South China Morning Post.

Despite falling to a new low since 1990, when political turmoil drove economic growth down to 3.9%, the 6.1% rate met the target range of between 6.0% and 6.5% set by the central government at the beginning of last year, but was below the market expectation of 6.2%.

The headline figure was in line with forecasts of the International Monetary Fund and the World Bank for China's economic growth this year, the Post report said.