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China’s growth slows to weakest level in 27 years

China’s growth slows to weakest level in 27 years

China’s economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, data showed today.

Chinese gross domestic product expanded 6% in the three months from July to September, down from 6.2% in the second quarter, according to the National Bureau of Statistics (NBS).

The reading – in line with an AFP survey of 13 analysts – is the worst quarterly figure since 1992 but within the government’s target range of 6-6.5% for the whole year.

China’s economy grew by 6.6% in 2018.

“The national economy maintained overall stability in the first three quarters,” said NBS spokesman Mao Shengyong.

“However, we must be aware that given the complicated and severe economic conditions both at home and abroad, the slowing global economic growth, and increasing external instabilities and uncertainties, the economy is under mounting downward pressure,” he said.

Services and high-tech manufacturing were the key areas of growth, while employment was “generally stable”, he added.

Beijing has stepped up support for the economy with major tax and rate cuts and has scrapped foreign investment restrictions in its stock market.

Earlier this week the central bank said it was pumping 200 billion yuan ($28 billion) into the financial system through its medium-term lending facility to banks, which is designed to maintain liquidity.

But the efforts have not been enough to offset the blow from softening demand at home.

The trade conflict and weak domestic demand prompted the International Monetary Fund to lower its 2019 growth forecast for China to 6.1% from 6.2% on Tuesday.

The long-running trade war with the US has also chipped away at the Chinese economy.

This week, Beijing posted weaker-than-expected import and export figures for September after Washington imposed new tariffs that month.

And there were mixed signals for China’s economy in September.

Industrial output rose 5.8%, from 4.4% in August, led by a surge in demand for solar panels and electric vehicles, according to the NBS.

But fixed-asset investment slid to 5.4% year on-year in the nine months from January to September, from 5.5% in January to August, as the government warned against risky borrowing to build roads and bridges that could artificially pump up GDP in the short run.

China’s army of consumers were slowly starting to open their wallets again, with retail sales edging up 7.8%year-on-year in September, compared with 7.5% in August.

Analysts said that despite a stronger September, pressure on economic activity should intensify in the coming months.

They said they expects infrastructure spending to decline as China tries to rein in toxic debt and added that the recent boom in property development looks set to unwind.

A “phase one” deal announced by US President Donald Trump last Friday after he met China’s top negotiator Liu He in Washington offered a temporary reprieve from further tariff hikes.

NBS spokesman Mao said the mini-deal was “good sign” for global markets.

“We feel that the global economy and global trade are increasingly moving towards reducing protectionism and freedom,” he said.

The deal, however, did not roll back any of the stinging tariffs already imposed on hundreds of billions of dollars in trade between the economic powers, nor did it address another round of import taxes planned for December.

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China imports, exports down in September as growth cools

China imports, exports down in September as growth cools

China’s imports and exports fell more than expected in September, official data showed today, as US tariffs and cooling demand at home and abroad hit trade in the world’s second largest economy.

Globally, China’s exports dropped 3.2% in September from the same period last year, while imports dived 8.5%, according to data from the customs administration.

The figures were worse than a Bloomberg forecast, which estimated exports to drop by 2.8% and imports to fall by 6%.

The US is now China’s third biggest trade partner – after the European Union and the Southeast Asian trading bloc ASEAN – with imports from the US down 26.4% in September.

China promised to increase US agricultural purchases in a partial US-China deal announced on Friday, which also includes protections for intellectual property and opening up financial markets.

Engulfed in an impeachment inquiry, US President Donald Trump heralded the deal as a major breakthrough.

But it may only offer a temporary tariff reprieve because it lacks specifics and leaves the thorny issues such as unfair state subsidies to Chinese firms for later, analysts told AFP.

So far, the two sides have imposed punitive tariffs covering more than $360 billion worth of goods in two-way trade.

China’s trade surplus with the US narrowed 3.9% to $25.8 billion in September from $26.9 billion in August.

“We believe that as Sino-US trade negotiations have made progress and we expect further healthy development in bilateral trade,” said Li Kuiwen, a spokesman for Chinese customs.

China’s total trade surplus in September was $39.65 billion.

A major escalation in the trade war last month was “partly to blame” for the weak figures, said Julian Evans-Pritchard, of Capital Economics.

Washington imposed 15% tariffs on more than $125 billion in Chinese imports on September 1, and Beijing retaliated with its own fresh levies.

As a result, “the contraction in exports to the US deepened further, while shipments to the rest of the world held steady”, Evans-Pritchard wrote in a research note.

“With the mini US-China trade deal unlikely to alleviate the main headwinds facing exporters, it will take longer before growth in outbound shipments bottoms out,” he added.

Chinese imports, which declined for the fifth consecutive month amid cooling domestic demand, may also not see a strong recovery, he said.

Pork imports, however, surged 43.6% year-on-year in September after an outbreak of African swine fever decimated pig supplies in the country.

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US officially designates China a ‘currency manipulator’ as trade war rages

US officially designates China a ‘currency manipulator’ as trade war rages

The United States has formally accused China of manipulating its currency, marking the second major escalation in the two countries’ spiralling trade war in just 24 hours.

Washington’s sudden move came the day China allowed the yuan to fall below seven to the dollar for the first time in about a decade – provoking US President Donald Trump’s ire and sending global equities markets diving into the red.

Wall Street yesterday posted its worst one-day losses of 2019 as hope of any near-term resolution to the year-long trade war between the world’s top two economies appeared to slide out of view.

In a Twitter outburst earlier in the day, Mr Trump had angrily accused Beijing of weakening the yuan “to steal our businesses and factories”.

Chinese state media also announced yesterday that Beijing had suspended purchases of American farm exports, piling pain on US agricultural states already battered by Beijing’s retaliation in the trade war.

US Treasury Secretary Steven Mnuchin, “under the auspices of President Trump, has today determined that China is a currency manipulator,” the Treasury Department said in a statement.

As a result, Mr Mnuchin will engage the International Monetary Fund “to eliminate the unfair competitive advantage created by China’s latest actions,” the statement said.

Behind the US and China’s conscious economic decoupling

The new designation is largely symbolic, since it calls for consultations with countries found to be manipulating their currencies.

But it could gain teeth if the Commerce Department begins imposing tariffs on countries found to be undervaluing their currencies, as that department said earlier this year it plans to do.

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China’s exports fall ahead of crucial trade talks

China’s exports fall ahead of crucial trade talks

China’s exports fell more than expected in April while imports rose, official data showed today ahead of high-stakes talks aimed at resolving a trade war with the US.

The world’s two leading economies face a possible make-or-break moment when top negotiators meet in Washington this week following months of fraught talks.

US President Donald Trump has upped the ante with plans to more than double tariffs on $200 billion in Chinese goods on Friday, the last day of a two-day visit by President Xi Jinping’s point man Vice Premier Liu He.

The trade war has battered shipments between the economic giants.

In April, China’s exports across the Pacific fell 13.2% from a year earlier, while imports from the US fell 25.7%, according to the data from China’s customs administration.

The politically sensitive trade surplus with the US remained large, widening to $21 billion last month from $20.5 billion in March. Last year it hit a record $323.3 billion.

Global markets have taken a beating this week as investors grow increasingly concerned that the China-US trade deal, which last week appeared all but ready to sign, could fall through.

US negotiators accused Beijing of reneging on commitments made during months of talks focusing on clamping down on theft of US technology and reducing China’s massive subsidies.

Analysts said that if Trump’s threat becomes reality, it will be a game changer for the global economy.

They added that the worst-case scenario would result in a US recession and a rapid reduction of growth in China.

Tepid global demand for China’s goods have heightened the risk for Beijing, which posted 6.4% economic growth in the first quarter, having decelerated every quarter last year.

China’s exports to the world sank 2.7% on-year last month while imports rose 4%, producing a trade surplus of $13.8 billion.

Economists polled by Bloomberg had expected a 3% rise in exports with imports projected to fall 2.1%.

Beijing has moved to jumpstart its cooling economy this year with massive tax cuts and fee reductions, and a targeted reduction in the amount of cash that small and medium-sized banks must hold in reserve announced on Monday.

But the central bank has yet to cut interest rates.

In March China’s exports unexpectedly jumped 14.2%, and analysts caution it is difficult to compare trends at the start of the year due to the Chinese New Year holiday, which fell in February.

Over the first four months of the year China’s exports rose only 0.2% on-year while imports dropped 2.5%, both down from the final quarter of last year.

Data last week showed China’s factory activity softened in April, with the new export orders sub-index rising from March, but remaining in contraction territory.

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