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More provinces cut growth targets in 2019 than in 2018

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More Chinese provinces have cut their annual growth targets compared with the year before, a sign of deepening pessimism among local governments amid weakening domestic demand and an unresolved trade dispute with the United States.

Of China’s 31 provinces, regions and municipalities, at least 23 cut their economic growth targets for this year, according to provincial announcements this month. In 2018, 17 provinces set lower annual targets.

Shandong, China’s third-richest province, has yet to announce its 2019 target.

Five provinces — Sichuan, Hebei, Guizhou, Gansu and Hainan — kept their targets unchanged from last year. That compares with 12 provinces that maintained their targets in 2018.

Only one province — Hubei — raised its target, encouraged by an emerging high-tech manufacturing sector.

The lower expectations among the provinces this year are in line with forecasts for a broader slowdown in the world’s second-biggest economy. China’s gross domestic product (GDP) growth is widely estimated to further weaken from last year.

GDP grew the least last year since 1990 as a multi-year campaign to curb risky lending practices squeezed access to corporate financing, hitting China’s private sector. A longer-term effort to rein in polluting and low-value industries also hurt factory output.

Moreover, China’s vast services sector has lost steam, while an increasingly cautious consumer outlook dulled retail sales.

The trade dispute with the United States also hammered Chinese exporters. Export-oriented provinces such as Guangdong, Jiangsu and Fujian all missed their 2018 economic growth targets.

The government may unveil more fiscal stimulus during the annual parliamentary meeting in March, including bigger tax cuts and more infrastructure spending.

At the meeting, the government is expected to unveil a lower annual GDP growth target of 6-6.5 percent, policy sources previously told Reuters.

GDP grew 6.6 percent last year, in line with the government’s target of around 6.5 percent.

Last year, 15 provinces, regions and municipalities met or exceeded their growth targets, including Beijing, Shanghai, Zhejiang, Henan, Sichuan, Hebei and Hubei.

An almost equal number missed their targets. Among them, Inner Mongolia, Tianjin, Hainan, Heilongjiang, Jilin and Xinjiang fared more poorly than others, undershooting their goals by at least 1 percentage point.

Chongqing was the worst — missing its target by 2.5 percentage points.

Local officials said the municipality, which accounted for 2.3 percent of China’s $13 trillion economy last year, was weighed down by an ongoing restructuring of its industries.

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