China Economy in Freefall. Is Trump to Blame?

China, with a population of 1.4 billion, is currently home to the world’s second-largest economy.

While China is still experiencing growth, it is not at the levels the country has grown accustomed to.

The downtrend in China’s GDP growth is a recent phenomenon that has been ongoing for the past several years, though the ongoing trade war with the Trump administration is playing a role in speeding the decline.

China’s most recent quarter was the least growth that its economy has seen since the early 1990s. The economy grew 6% last quarter when compared to a year earlier.

Financial experts polled by Reuters expected it to be closer to a figure of 6.1%.

China previously posted a 6.2% growth rate in the second quarter of this year and a 6.4% growth rate in the first quarter.

One crucial part of the economy that has seen a downturn are investments into fixed assets. Investments in fixed assets have traditionally been a marker into how well the construction industry is doing.

The construction industry is one of the main economic forces behind China’s long expanding economy.

Investment in the industrial, agricultural, and manufacturing sectors of the economy also was down.

A spokesman for the Chinese Statistics Bureau, Mao Shengyong, put a bright spin on otherwise dreary numbers: “Despite increased downward pressure on economic growth, major economic indicators remained in a reasonable range.”

Shengyong points to stable rates in unemployment and inflation as well as food and energy prices.

Even slower times ahead

Other financial experts aren’t as confident as Shengyong. They believe we will continue to see an ever-increasing weakening of the Chinese economy.

Senior China economist at Capital Economics, Julian Evans-Pritchard, has gone on record saying that “despite a stronger September, pressure on economic activity should intensify in the coming months.”

Evans-Pritchard went on to say, “Cooling global demand will continue to weigh on exports, fiscal constraints mean that infrastructure spending will wane in the near-term and the recent boom in property construction looks set to unwind.”

Bo Zhuang chief China economist at TS Lombard, also says the Chinese economy will continue to slow. Zhuang predicts the Chinese economy will only grow by 5.8% for the fourth and final quarter of the year.

The Chinese government’s growth goal for the whole of 2019 was 6.1%

Both Evans-Pritchard and Zhuang have also stated they wouldn’t be surprised if China enacted economic stimulus procedures within the near future.

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