China's Slowest Economic Growth In 27 Years

China’s economic growth slumped to its lowest level since 1992 as the world’s second-largest economy feels the effects of the prolonged trade war with the United States. The country’s Gross Domestic Product grew at 6.2% (annual rate) in the quarter ended June, down from 6.4% in the previous two quarters, according to government figures released on Monday.

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And the Chinese economy will continue to face “downward pressure” in the second half of this year, the country’s National Bureau of Statistics (NBS) said in a statement. “The Chinese economy is still in a complex and grave situation. Global growth has slowed and external uncertainties are on the rise,” it cautioned.

The NBS acknowledged China’s trade war with the US has indeed weighed on its economy. While President Trump and China’s President Xi Jinping agreed at the recent G-20 summit to hold off on further tariffs and to restart trade negotiations, most China analysts believe a meaningful trade deal will not be reached anytime soon. I hope they’re wrong.

As you may recall, President Trump had been threatening to put tariffs on an additional $300 billion of Chinese goods, thus affecting virtually everything we buy from China. President Xi, in response, said China was prepared to place new tariffs on more American goods and add additional taxes on US companies doing business (or seeking to) in China. Fortunately, the trade war is on hold for now.

White House Trade Adviser Peter Navarro said in an interview with CNBC last Friday that US Trade Representative Robert Lighthizer will travel to Beijing with Treasury Secretary Steven Mnuchin just ahead. But analysts say question marks remain over whether the two sides can reach a deal to remove tariffs introduced over the past 12 months.

Within Monday’s GDP report, China reported a drop in both exports and imports for the first six months of this year, reflecting the toll the trade war is having on an economy already suffering from weaker domestic demand. China’s exports fell 1.3% year-on-year for the first half in dollar terms, while imports dropped 7.3%. Exports to the US fell 8.1% in the first half of this year.

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