China is the world’s second largest economy, only slightly behind the economic behemoth of the 20th Century – The United States of America.
As the leaders of the two countries continue to discuss the prospect of a potentially highly damaging trade war. some news due out tomorrow may change China’s stance, or at least, make the Asia nation rethink their economic policies.
Tomorrow (Monday) Chinese authorities are expected to announce that economic growth in the world’s second largest economy slowed to its lowest rate for over 28 years last year. The decline comes amid falling demand domestically and the ongoing tariff issues with the US.
Recent developments are adding pressure on the Chinese Government to implement further measures to prevent a sharper slowdown. The Chinese authorities have promised further support for the Chinese economy this year. Although ruling out a “flood” of stimulus measures released previously, Beijing is committed to negating the risk of huge job losses. Companies including car manufacturers and Apple (NASDAQ:AAPL) have already voiced profit warnings.
In the past, the Chinese authorities have unleashed rounds of stimulous measures, mostly as knee-jerk reactions, which has left the Chinese economy, responsible for generating almost a third of all global growth over the past decade, with a growing mountain of growing debt.
Chinese GDP on the Slide
Analysts have forecast the Chinese economy to have grown 6.4 percent in the October-December quarter from the same time the previous year, This a slow down from the 6.5 percent rate recorded in previous quarter. It also matches levels last seen in the global financial crisis of 2009
If analysts’ expectations are accurate, it could mean 2018 Chinese gross domestic product (GDP) growth stands at 6.6 percent. The last time China saw such a slow rate of growth was in 1990 and down from the revised 6.8 percent recorded in 2017.
Crunch US – China Talks Ahead
Already, some Chinese factories, notably in Guangdong – China’s export hub – have closed earlier than usual before the Lunar New Year holiday. The reason? the tariff war with the United States has already curtailed orders.
Trade negotiators from China and the US face an early March deadline. Despite talk of presummit talks, nothing of substance has happened as yet. President Donald Trump is threatening to hike tariffs sharply and immediately if there are no real signs of progression in the talks.
If China’s economic miracle is to continue, it needs to avoid a trade war with its biggest rival and trading partner – The US.
