China's economy expanded at the weakest pace in nearly three decades in 2018 as the trade war with the U.S. hurt business activity and sentiment.
Full-year growth slowed to 6.6 percent in 2018, which was weakest pace of expansion since 1990, data from the National Bureau of Statistics showed on Monday.
The growth rate exceeded the around 6.5 percent target of the government and was in line with economists' expectations. The agency had revised down the 2017 growth figure to 6.8 percent from 6.9 percent on Friday.
Gross domestic product grew 6.4 percent year-on-year in the fourth quarter of 2018, which was slower than the 6.5 percent expansion in the previous three months. The latest growth rate was the weakest since the global financial crisis in 2009.
The economy grew 6.8 percent in the first quarter and 6.7 percent in the three months to June.
China's economic expansion started easing from double-digits since the government began the switch from investment and debt-driven growth to focus on boosting domestic consumption.
However, the recent trade tensions with the U.S. under the Donald Trump administration exacerbated the slowdown. Though the talks between the two countries at the start of the year have raised some hope of a solution to trade differences, an agreement on technology is likely to take more time, economists said.
"There will be increasingly more developed economies, or even emerging economies, trying to ban the use of China-made electronic components and goods," ING economist Iris Pang said. "That will hurt the production sector of electronics in China, and the prices of these items will fall in China."
"Our baseline forecast assumes that the trade war will continue in 2019. GDP will be 6.3 percent as fiscal stimulus of CNY 4 trillion and 3 more RRR (required reserve ratio) cuts will support the economy in terms of funding and liquidity," the economist added.
Earlier this month, the People's Bank of China cut the RRR for banks by 100 basis points, to ensure more liquidity as markets worry over the health of the economy. The central bank had reduced the ratio four times in 2018.
The latest reduction in the RRR released about $116 billion of liquidity into the banking system to boost lending, especially to small businesses, ahead of the Chinese New Year.
The bank is widely expected to step up monetary policy easing in coming months to avoid a sharp slowdown in the economy.
Chinese Premier Li Keqiang has said that more measures would be taken to bolster the economy, including cuts to reserve ratios and taxes.
The NBS also released economic indicators for December on Friday that showed some improvement at the end of the year.
Industrial production grew 5.7 percent year-on-year in December, beating expectations for a 5.3 percent gain. Retail sales rose 8.2 percent from a year ago, exceeding the forecast for an 8.1 percent increase.
Fixed asset investment grew 5.9 percent year-on-year, which was slightly slower than the 6 percent economists had predicted.
"The latest data suggest that economic growth remained weak by past standards at the end of 2018 but held up better than many feared, in part thanks to a policy-driven recovery in infrastructure spending," Capital Economics economist Julian Evans-Pritchard said.
"Still, with the headwinds from cooling global growth and the lagged impact of slower credit growth set to intensify in the coming months, China's economy is likely to weaken further before growth stabilises in the second half of the year on the back of expanded policy stimulus."
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