China’s rulers forced to scramble at home as trade war takes toll on economy

by WorldTribune Staff, July 16, 2019

Due in large part to U.S. trade pressure, China’s economic growth in the second quarter of 2019 slowed to its weakest pace in some three decades.

President Donald Trump tweeted: “The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. These Tariffs are paid for by China devaluing & pumping, not by the U.S. taxpayer!”

China’s factories in June cut jobs at the fastest pace in over a decade.

In June, China’s exports and imports fell, and an official survey showed factories were cutting jobs at the fastest pace in over a decade.

“Due to the global slowdown and impact from the trade war, our exports will continue to fall and it’s possible they may post zero growth for the year,” said Zhu Baoliang, chief economist at the State Information Center, a top Chinese communist government think-tank.

China’s economic growth slowed to 6.2 percent in the second quarter. Zhu said he expects economic growth to slow to 5.8 percent next year. columnist Sol Sanders warned in March 2013 that growth in China was “dropping below what had been considered acceptable limits. That is, it is falling under the 8 percent annual growth which conventional wisdom held was necessary to preserve stability in a still growing population of 1.3 billion.”

Sanders wrote: “That stability is already under attack. So-called ‘mass incidents’, outbreaks of local violence throughout the country, have accelerated to the point the government no longer issues statistics about them. They have arisen in the past over land grabs by local authorities – often cropland – without proper compensation to the peasants whose livelihood is undermined.”

Julian Evans-Pritchard, senior China economist at Capital Economics, said of the June 2019 data: “The monthly data were better than expected… (But) we are skeptical of this apparent recovery given broader evidence of weakness in factory activity. Looking ahead, we doubt that the data for June will mark the start of a turnaround.”

Economic analysts note that the government of supreme leader Xi Jinping has relied heavily on fiscal stimulus to underpin growth this year. China announced massive tax cuts worth nearly 2 trillion yuan ($291 billion) and a quota of 2.15 trillion yuan for special bond issuance by local governments aimed at boosting infrastructure construction.

The economy has been slow to respond, however, and business sentiment remains cautious, the economists say.

A Reuters report noted that car dealers in China “are offering big discounts to customers to reduce high inventories that have built up due to changing emission standards. Motor vehicle production actually fell 15.2 percent, the 11th monthly decline in a row, suggesting automakers don’t expect a sustained bounce in demand any time soon.”

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