China’s economy stumbled last year to its lowest growth rate in almost 30 years after the tit-for-tat trade war with the US took its toll on manufacturing output and consumer spending.
The world’s second-largest economic power grew by 6.1% in 2019, down from 6.8% in 2018, and the lowest rate in 29 years.
However, investors cheered an apparent turnaround in fortunes following better-than-expected industrial output and retail sales figures for December, sending stock markets in Asia, Europe and the Americas higher.
The main international markets were all positive following signs of improved business and consumer confidence in China, with Britain’s FTSE 100 gaining 71 points or almost 1%.
Ricardo Evangelista, senior analyst at ActivTrades, said optimism was spreading across the City of London about China’s ability to ride out the turmoil caused by Trump’s tariff hikes on Chinese imports.
“The positivity came mainly from China, where industrial production and retail sales both exceeded the forecast, appearing to signal the turn of a corner for the growth of the Chinese economy,” he said.
The US and China signed a first stage trade deal earlier this week that was characterised by analysts as a truce, after it signalled a limit on tariffs but left many in place.
Investors are hoping that the deal, although limited, could help thaw relations.
China’s industrial production grew 6.9% year-on-year in December, which was the strongest in nine months. Retail sales grew by 8%, which was also stronger than expected, while fixed-asset investment beat forecasts with 5.4% growth.
Jim Reid, a fixed-income analyst at Deutsche Bank, said: “Overall a strong set of December numbers came out from China pointing to a gradual recovery in economic activity.”