5 Beaten-Down Chinese Stocks Set To Rebound In 2020

The prolonged trade friction between the United States and China has taken its toll on economies across the globe, and the Chinese economy for obvious reasons is no exception. The roughly 18-month long trade war has taken a bite out of the world’s second-biggest economy, hurt a host of industries in that country and dragged down stocks of several Chinese companies.

China’s Economy Rattled by Tariff War

The bitter trade tussle has hurt the Chinese economy to a much greater extent than the U.S. economy. China’s economy grew at a slower-than-expected pace of 6% in the third quarter of 2019 on a year-over-year basis, the weakest in nearly three decades, amid trade tensions and softer domestic demand. The growth also slowed from 6.2% clocked in the second quarter.

The slowdown occurred despite Beijing’s efforts to pep up its economy through measures including tax cuts. The trade tiff has created an uncertain environment for businesses and consumers, hurting the Chinese economy.

China, a major source of demand for a vast spectrum of products, has emerged as a global growth engine over the past few decades. As such, the sputtering engine of the Chinese economy has weighed on the world economy this year.

Notably, China’s economy grew 6.6% in 2018, the slowest pace in almost three decades. China has set its GDP growth target for 2019 at 6-6.5% and hopes to achieve that target. Beijing is reportedly expected to set a growth target of roughly 6% for 2020.

China’s manufacturing sector bore the brunt of trade war this year. While November saw a sudden recovery in manufacturing on the back of government stimulus actions, the sector languished for the most part of 2019. The official manufacturing purchasing managers’ index (PMI) contracted for six straight months before modestly expanding in November. China has also seen a slowdown across infrastructure and the property sectors this year.

Meanwhile, the country’s automobile sector is among those that were hardest hit by the fierce trade spat. The sector is crumbling under the weight of the steep U.S. tariffs.

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