- China's economic growth drops to 6.1% in 2019 marking the worst in almost three decades.
- China ended 2019 on a better note than previously expected.
- Chinese top officials highlight that 2020 can be even more challenging than 2019.
- USD/CNY dropped from 6.8790 to 6.8540 following the economic data on Friday.
China’s National Bureau of Statistics revealed the Gross Domestic Product (GDP) report on Friday. The data posted the economic growth in 2019 at the weakest in almost three decades. As per the experts, the ongoing trade war with the United States of America has weighed heavily on China’s economy at large. With the start of the new year and a phase 1 trade deal having been recently signed between the two largest economies of the world, China is now expected to focus on adding stimulus directed at improving demand and investments that have laid low in the past year.
China Ended 2019 At A Better Note Than Previously Expected
Friday’s report, however, suggested that the second-largest economy of the world ended 2019 at a more positive note than was previously thought. Signing the phase 1 trade deal with the United States has lifted the business sentiment with the previous measures aimed at boosting growth now finally starting to serve the purpose.
In terms of figures, the data highlighted China’s economy to have lost pace to 6.1% in 2019. In 2018, the economic growth was capped at a higher 6.6%. As per the analysts, the number posted is sufficiently strong as it aligns with not only the global standards but also the target that the Chinese government had put forth for 2019. Nonetheless, expanding at a rate of 6.1%, 2019’s economic growth was the poorest for China since 1990.
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The experts further added that the ruling Communist Party is likely to face fierce challenges and pressures in 2020 as it works to double China’s GDP and incomes in order to earn the “moderately prosperous” title for the Asian superpower. Analysts forecast China’s long-term target to keep its economic growth at around 6% in 2020. The top government officials, however, have highlighted that the economic burden may be higher in 2020 as compared to that of 2019, hinting at a further drop in growth later in the year.
Response In The Forex Market
Following the economic data on Friday, USD/CNY was seen losing traction in the forex market. The pair dropped from a high of 6.8790 to a low of 6.8540 earlier on Friday. The currency pair is currently stabilizing around 6.8590 at the time of writing. The move was also associated with other data such as fixed asset investment, industrial production, retail sales, and unemployment rate that were also announced on Friday.