China’s economy slumps as U.S. trade war continues

China,China’s growth,China’s economy

Adding that the Chinese economy might continue to slow down before stabilizing in mid-2020, an economist at Hwabao Trust, Nie Wen said, "China's growth could slow to 6% to 6.1% in the second half".

Investment in factories, real estate and other fixed assets rose 5.8 per cent in the first half of the year, up 0.2 percentage points from the first five months, according to the NBS.

Chinese leaders have stepped up spending and bank lending to keep growth within this year's official target range of 6 percent to 6.5 percent and avert politically risky job losses.

Government measures taken to boost growth, such as massive tax cuts worth almost 2 trillion yuan ($291 billion; €258 billion), have so far failed to offset the slowdown.

The impact from the US-China trade war affected growth during 1Q19.

China president Xi Jinping and United States president Donald Trump had agreed on resuming the trade talks at the G20 summit after a seven-week stalemate.

The National Bureau of Statistics in Beijing said the economy faced a "complex environment both at home and abroad".

"China's economy in the third quarter may face more downward pressure", said Larry Hu, head of China economics at Macquarie Securities Hong Kong.

Since the trade truce was reached on June 29, China has reduced imports of soybeans from the U.S. In the week prior to the G20 summit, China imported 396,691 metric tons of soybeans; that has since dropped to 181,580 metric tons.

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And growth in infrastructure investment has retreated from years of near 20 per cent expansion - coming in at a 4.1 per cent rise in January-June. "Chinese economic growth slows down because of restructuring". The reading marked the highest since March 2018 when the growth rate was 10.1% (link in Chinese). The aim was to see the economy less dependent on investment and exports and an increased role for spending by consumers.

"Cutting the benchmark deposit and lending rates - the likelihood is very low". There are dangers, however, notably the high level of company debt. That was the lowest level since the first quarter of 2009 in the aftermath of the global financial crisis. That has helped prevent a more rapid and potentially disruptive slowdown, but at the price of creating additional financial risks.

The dampening economy follows a hard year for China in terms of U.S. relations. In June alone, industrial output growth accelerated to 6.3 percent from 5 percent in May.

Retail sales for June rose 9.8% in annual terms.

It has also moved to provide a liquidity boost by reducing the amount of cash banks must hold in reserve.

Trump and Chinese President Xi Jinping agreed in late June to restart talks on their stand-off over the longstanding USA trade deficit and Chinese economic policies that the US side says are unfair and violate Beijing's commitments to open markets.

Tariff hikes by President Donald Trump have battered Chinese as well as US exporters, and Chinese leaders have increased spending and loosened controls on bank lending to keep growth within this year's range of 6% to 6.5%.

As US and China continue talks on ways to end the trade war, President Trump in a tweet said today that US tariffs have had a major effect on companies wanting to leave China for "non-tariffed countries" with "thousands leaving" the country.

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