China has recorded its weakest annual GDP growth in almost 29 years last year but Chinese officials insist that the country's economy will stabilize.
China posted a gross domestic product (GDP) growth of 6.1% in 2019, which was near the bottom of the country's growth target range for the year and falling from 6.6% in 2018. The country also reported that GDP grew by just 6% in the fourth quarter.
The slowdown in growth by the second largest economy in the world has been attributed to rising debt, cooling domestic demand and fallout from the trade war with the US. However, trade tensions have dialed down a little bit after China and the US signed a "phase one" trade deal earlier in the week.
Under the phase one trade deal signed on Wednesday, China will buy an additional $200 billion worth of US goods and services over the next two years. In exchange, the US has agreed to bring down the tariffs on $120 billion in Chinese products from 15% to 7.5%.
This increase in purchases is comparable to the more than $185 billion worth of US products imported by China in 2017, prior to the trade war. The new deal will dramatically increase US exports over the next two years.
Ning Jizhe, China's national statistical chief, said the initial trade deal will give people more reason to be optimistic about the country's economic growth and that it will help China deepen its economic relationship with the US.
Vice Premier Liu He also expressed optimism about the country's economy and claimed that China is relying less on debt and is being driven by innovation.
Analysts have expected the deal to boost business confidence this year. As a result, Fitch Ratings raised its economic growth forecast for China this year to 5.9% from 5.7%.
J.P. Morgan Asset Management Global Market Strategist Chaoping Zhu said: "The signing of the phase-one trade deal is a signal that the situation is unlikely to deteriorate."
