- Chinese Economy Grew at Slowest Pace Since 1992
The ongoing trade war between the US and China further dragged the Chinese economy to its slowest rate of growth in almost 30 years in the second quarter of 2019.
The world’s second-largest economy grew at a 6.2 percent rate in the April-June quarter, down from the 6.4 percent recorded in the first quarter.
While June data pointed to growing factory output and retail sales, the uncertainty surrounding trade talks continue to dictate overall growth and sentiment.
Both exports and imports fell during the quarter to reduce net exports contribution to 20.7 percent in the first half from 22.8 percent achieved in the first quarter.
“We continue to see the second-quarter growth slowing, but I think we are seeing the stabilization,” Wang Tao, chief China economist at UBS AG in Hong Kong, said in an interview with Bloomberg TV. “The central bank needs to be a bit more proactive” going forward with additional reserve-requirement ratio reductions if higher tariffs come in, she said.
Still, government efforts at stimulating the economy appear to be yielding results as fixed asset investment in the private sector accelerated in the first half despite state companies slowing down.
Investment in the manufacturing sector grew by 3 percent in the first half, while infrastructure investment surged by 4.1 percent.
Similarly, consumers are spending as faster growth are recorded in sales of consumer goods, household appliances and furniture.
Again, while heavy discounts might have fuel consumer spending in the first half, it is unclear if that can be sustained going forward.
“Concerns over global growth slowdown and the persistence of U.S.-China trade war would continue to cloud the economic outlook. In the domestic market, whether the rebound in retail sales growth is sustainable is still uncertain.”David Qu and Qian Wan, Bloomberg Economics.