China’s economy growth cools further
Tariff war with U.S. taking a bite
China’s economic growth fall to 26-year low, adding to pressure on Chinese leaders in tariff fight with Trump.
BEIJING » China’s economic growth sank to its lowest level in at least 26 years in the quarter ending in June, adding to pressure on Chinese leaders as they fight a tariff war with Washington.
The world’s second-largest economy grew 6.2% over a year ago, down from the previous quarter’s 6.4%, government data showed Monday.
Forecasters expected China’s economy to rebound in late 2018 but pushed back that target after President Donald Trump raised tariffs on Chinese imports to pressure Beijing over its technology development tactics. Now, economists say the slowdown might extend into next year.
Weaker Chinese activity carries global repercussions. China is the world’s second-biggest export market behind the United States. Countries that feed raw materials to Chinese factories — from Chilean copper to Indonesian coal — are especially vulnerable to decelerating growth in China.
The proportion of South African output going to China, for instance, has shot up from 2% in the mid-2000s to 15% now, according to a study by the McKinsey Global Institute.
Additionally, China consumes 45% of the Democratic Republic of Congo’s exports, 33% of Australia’s and 24% of South Korea’s, according to United Nations data cited in the McKinsey report. Emerging market countries are also increasingly dependent on Chinese investment. China accounts for 13% of foreign direct investment — including corporate mergers and new factories — in Egypt, up from 1% in the mid2000s, and 8% of Pakistan’s, up from 2%.
Researchers at J.P.Morgan have estimated that if China’s annual growth slows to 4.5% by the end of the next decade, as they expect, global metals prices will plunge 40% to 60%.
Trump and President Xi Jinping agreed last month to resume negotiations in a fight that has battered both American and Chinese exporters. But economists warn their truce is fragile because they still face the same array of disputes that caused talks to break down in May.
“The trade war is having a huge impact on the Chinese economy,” Edward Moya of OANDA said in a report. “As trade negotiations struggle for meaningful progress, we are probably not near the bottom for China’s economy.”
Chinese leaders have stepped up spending and bank lending to keep growth within this year’s official target range of 6% to 6.5% and avert politically dangerous job losses. But they face an avalanche of unexpectedly bad news
including plunging auto sales.
In the second half of the year, “the external environment may still be more complicated,”
said a government spokesman, Mao Shengyong, at a news conference.
Quarterly growth was the lowest since China began reporting such data in 1993, according to an employee of the press office of the National Bureau of Statistics, Dong Hui.
In 2009, the NBS reported growth of 6.1% for the first three months of that year. However, Dong said that later was revised up to 6.4%. Jittery consumers are putting off major purchases, depressing demand for autos, home appliances and other goods.