What's going on?

New data on Friday confirmed that the Chinese economy was hogtied in the last year of the zodiac cycle � but shrewd investors might hope it�ll scurry ahead during the upcoming Year of the Rat.

What does this mean?

Friday�s figures showed China�s economy grew 6.1% overall in 2019: its weakest year since 1990. The country blames trade war with the US, and as tensions ebbed, growth did seem to stabilize: China�s economy grew at the same pace last quarter as it did in the previous one.


December�s performance was particularly positive. Investment shot up, particularly in manufacturing, while industrial output rose 6.9% compared to a year before � significantly more than the 5.9% analysts expected. That may be partly down to the early Chinese New Year frontloading production to December. Still, the green shoots of winter, which included higher-than-expected retail sales, may leave panda bears bamboozled.

Why should I care?

For markets: The slowdown should slow down.

China�s importance to the global economy meant markets worldwide were cheered by its rosy end to the year: December�s strong performance, combined with the preliminary trade deal signed with the US last week, could help things pick up in 2020. And while analysts expect the Chinese government�s growth target this year to be lower than 2019�s, the pace of deceleration should slow (tweet this). That�s partly thanks to significant extra spending on domestic infrastructure projects.


The bigger picture: A looming plague.
China�s engaged in a Herculean Mulanese effort to shift its economy away from a reliance on investment and towards Western-style consumption. That�s not quite going to plan: consumption contributed less to China�s growth last year than it did in 2018. Income growth, a prerequisite for increased consumer spending, disappointed in the Year of the Pig when accounting for inflation: the rise in the prices of goods and services was higher than normal thanks, aptly, to a pork crisis. And China�s working-age population actually shrank last year, signaling an uphill battle ahead.