New figures released yesterday have revealed that China’s economy is experiencing its slowest growth rate since records officially began 27 years ago. The Chinese economy slowed down from 6.4% to 6.2% in the second quarter of 2019; the slowest pace of growth since Q1 1992.
Some experts believe that this might actually be the Asian powerhouse’s worst performance since the economic fragility of the late 1980s – a period of mass protests that resulted in martial law and the Tiananmen Square massacre of 1989.
Mao Shengyong, spokesperson for the National Bureau of Statistics (NBS) and the director general of the Department of Comprehensive Statistics, said: “In general, the national economy operated within a reasonable range in the first half of the year, having achieved generally stable growth while making further progress. However, we must also note that the current domestic and international economic situation remains complicated and severe.
“Global economic growth has slowed down, external instability and uncertainties have increased, and the problem of domestic development imbalance is still outstanding, while the economy faces new downward pressures.”
US president Donald Trump took to his Twitter account to boast about how effective he believed the trade war was in America’s favour and how key it was to China’s diminished performance.
China’s 2nd Quarter growth is the slowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving. This is why China wants to make a deal....— Donald J. Trump (@realDonaldTrump) July 15, 2019
....with the U.S., and wishes it had not broken the original deal in the first place. In the meantime, we are receiving Billions of Dollars in Tariffs from China, with possibly much more to come. These Tariffs are paid for by China devaluing & pumping, not by the U.S. taxpayer!— Donald J. Trump (@realDonaldTrump) July 15, 2019
Chinese officials continue to stress that the new, lower growth rate is still between the 6% and 6.5% target range set for 2019, and with retail sales and industrial production levels both higher year-on-year, it’s clear that China’s stimulus package to compensate for the trade war is working – though how sustainable it is is a different matter.
Despite President Trump’s bold claims, it’s not just China that’s suffering from the trade war. The United States’ trade deficit is at a 10-year high as of last year, and the trade gap with China – which Trump sought to shrink – has widened. Another concern is President Trump’s argument is that China is paying the trade tariffs. Trade tariffs only apply to imports from a nation, meaning that American not Chinese companies are stumping up the cash for goods from China. It’s fair to say that demand for Chinese products has suffered, but in some cases dealing with China is the only supply line and must be pursued.