The world’s second-largest economy grew 6.2 per cent over a year ago in the three months ending in June, down from the previous quarter’s 6.4 per cent, government data showed Monday. That was the lowest level since the first quarter of 2009 in the aftermath of the global financial crisis.
“The trade war is having a huge impact on the Chinese economy,” said Edward Moya of OANDA 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 shore up growth and avert politically dangerous job losses. But they face an avalanche of unexpectedly bad news including plunging auto sales as they fight with President Donald Trump over Beijing’s technology ambitions.
The economy faces a “complex environment both at home and abroad,” the National Bureau of Statistics said in a statement.
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Weaker Chinese activity has global repercussions. This country is the biggest export customer for its Asian neighbours and a major market for global suppliers of food, mobile phones, industrial technology and consumer goods.
Growth in retail sales slowed to 8.4 per cent in the first half of 2019, down 0.1 percentage points from the first quarter, the government reported. Growth in factory output decelerated to 6 per cent in the first half, down 0.1 percentage points from the first quarter.
Auto sales, reported earlier, fell 7.8 per cent in June, extending a yearlong contraction in the industry’s biggest market. Chinese exports to the United States fell 7.8 per cent in June from a year, depressed by Trump’s penalty tariff hikes.
The fight between Beijing and Washington, the two biggest global traders, has disrupted sales of goods from soybeans to medical equipment, battering exporters on both sides and rattling financial markets.
Trump and Chinese President Xi Jinping agreed last month to resume negotiations. But economists warn the truce is fragile because the two sides face the same array of disagreements that caused talks to break down in May.
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Beijing is pumping money into the economy through higher spending on building highways and other public works. That has shored up growth but set back efforts to reduce reliance on investment, which has pushed debt to levels that prompted credit rating agencies to cut China’s credit rating.
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.
Credit growth has accelerated to dangerously high levels, according to Iris Pang of ING. She said that suggests the economy “would be deteriorating” without stimulus.
“This worries us,” she said in a report Friday.