The Chinese economic growth rate slowed to 6.2% in the second quarter. It is the slowest growth rate of Chinese economy in the last 27 years. The main reason of this slow growth seems to be the faltering demand at home and abroad in the face of mounting US trade pressure.
The trade war between US and China has also played its part in the slowdown. There were hopes at the beginning of trade war that it will not last long and both countries will be able to sort out differences sooner than later. But trade war became longer and costlier for both national economies and world economy. The world financial markets and Chinese trade partners are worried about the health of second largest economy of the world. The fears of recession in the world economy are also rising.
Monday’s growth data marked a loss of momentum for the economy from the first quarter’s 6.4pc, adding to expectations that Beijing needs to do more to boost consumption and investment and restore business confidence. The April-June pace, in line with analysts’ expectations, was the slowest since the first quarter of 1992, the earliest quarterly data on record.
Trade pressures have intensified since Washington sharply raised tariffs on Chinese goods in May. While the two sides have since agreed to resume trade talks and hold off on further punitive action, they remain at odds over significant issues needed for an agreement.
For June, both exports and imports fell, and an official survey showed factories were shedding jobs at the fastest pace since the global crisis a decade ago..
Due to the global slowdown and impact from the trade war, our exports will continue to fall and it’s possible they may post zero growth for the year,” said Zhu Baoliang, chief economist at the State Information Centre, a top government think-tank.
The contribution from net exports will decline as domestic demand gradually recovers, Zhu told the official Financial News ahead of the Q2 data, adding that he expects economic growth to slow to 5.8pc next year.
The Chinese government has leaned largely on fiscal stimulus to underpin growth this year, announcing massive tax cuts worth nearly 2 trillion Yuan ($291 billion) and a quota of 2.15 trillion Yuan for special bond issuance by local governments aimed at boosting infrastructure construction. The economy has been slow to respond, however, and business sentiment remains cautious.
Everything is not seems gloomy for Chinese economy. There are signs of recovery and growth in some sectors. The June industrial production, retail sales and fixed-asset investment data all beat analysts’ forecasts, suggesting that Beijing’s earlier growth-boosting efforts may be starting to have an effect.
Industrial output climbed 6.3pc from a year earlier, data from the National Bureau of Statistics showed, picking up from May’s 17-year low and handily beating an expected 5.2pc. Daily output for crude steel and aluminum both rose to record levels. Retail sales jumped 9.8pc – the fastest since March 2018 – and confounding expectations for a slight pullback to 8.3pc.
Your email address will not be published. Required fields are marked *