China is revising 2019 GDP by cutting manufacturing by $ 77 billion

BEIJING – China’s National Bureau of Statistics cut the national growth rate for 2019 on Wednesday with significant cuts in manufacturing.

The downward revision gives the country a lower base to report growth for 2020.

GDP rose by just 6.0% to 98.65 trillion yuan ($ 15.1 trillion) last year, down from 6.1%, as previously reported.

The main driver was by far a decline in manufacturing by 503.8 billion yuan ($ 77.15 billion), or about 2% of the sector’s original 2019 contribution to growth.

“This suggests that the impact of the US-China trade war on China’s manufacturing activity has been underestimated,” said Yue Su, chief economist at The Economist Intelligence Unit, in a statement.

Trade tensions between the world’s two largest economies began to escalate in 2018, and the friction increased the following year as both countries applied tariffs on goods from the other and the US and blacklisted large Chinese tech companies. Both countries signed a temporary ceasefire with the signing of the first phase trade agreement in January 2020.

The Bureau of Statistics has made the biggest upside changes in the tertiary or service industries, with information transfer, software, and IT services increasing 70.2 billion yuan.

China regularly reviews its GDP numbers, often towards the end of the year. Many question the accuracy of the statistics, as local governments tend to face political pressure to meet preset growth targets.

This year, following the coronavirus pandemic, the central China government made a rare decision not to announce a GDP growth target. Analysts generally expect growth of around 2% for 2020.

For Bruce Pang, director of macro and strategic research at China Renaissance, the sharp downward revision of the secondary or manufacturing industries is in line with efforts to reduce that industry’s share of total GDP.

Such a lowering of the previous year’s numbers also adds to the “brightness and quality” of economic growth numbers for the next few years, Pang said, according to a CNBC translation of his Chinese comments.