China’s economic growth cooled to its weakest in nearly 30 years in 2019.

More stimulus expected in 2020 as Beijing tries to boost sluggish investment and demand

China’s economic growth cooled to its weakest in nearly 30 years in 2019 amid a bruising trade war with the United States, and more stimulus is expected this year as Beijing tries to boost sluggish investment and demand.

As expected, China’s GDP growth slowed to 6.1% last year, from 6.6% in 2018, data from the National Bureau of Statistics showed. Though still strong by global standards, and within the government’s target range, it was the weakest expansion since 1990.

Fourth-quarter GDP rose 6% from a year earlier, steadying from the third quarter, though still the weakest in nearly three decades.

Policy sources have told Reuters that Beijing plans to set a lower growth target of around 6% this year from last year’s 6-6.5%, relying on increased infrastructure spending to ward off a sharper slowdown.

Key targets are due to be announced in March.

“We expect China’s growth rate will come further down to below 6% in the coming year,’’ said Masaaki Kanno, chief economist at Sony Financial Holdings Inc. “The Chinese economy is unlikely to fall abruptly because of ... government policies, but at the same time the trend of a further slowdown of the economy will remain unchanged.”

December data released along with GDP showed a surprising acceleration in industrial output and a more modest pick-up in investment growth, while retail sales were solid.

Industrial output grew 6.9% from a year earlier, the strongest pace in nine months, while retail sales rose 8.0%.

“Despite the recent uptick in activity, we think it is premature to call the bottom of the current economic cycle,” Julian Evans-Pritchard and Martin Rasmussen at Capital Economics said in a note.

“External headwinds should ease further in the coming quarters thanks to the ‘phase one’ trade deal and a recovery in global growth. But we think this will be offset by a renewed slowdown in domestic demand, triggering further monetary easing by the People’s Bank.”

Among other key risks this year, infrastructure — a key part of Beijing’s stabilisation strategy — has remained stubbornly weak.

Infrastructure investment grew just 3.8% in 2019, decelerating from 4% in January-November, despite sharply higher local government bond issuance and other policy measures.

“This shows that local governments continued to face funding constraints...,” said Tommy Xie, China economist at OCBC Bank in Singapore.

Some analysts are also worried about signs of cooling in the housing market, a key economic driver.

Property investment growth hit a two-year low in December even as it grew at a solid 9.9% pace in 2019. Property sales fell 0.1%, the first annual decline in five years.

Beijing has worked for years to keep speculation and home price rises in check, and officials vowed last year they would not use the property market as a form of short-term stimulus.

“China will roll out more support measures this year as the economy faces further pressure,’’ Ning Jizhe, head of the statistical bureau told a news conference.

He noted that per capital GDP in China had surpassed $10,000 for the first time last year. But analysts believe more painful reforms are needed to generate additional growth.