Beijing [China]: China, the world’s second-largest economy, on Monday said its economic growth fell to its slowest pace in nearly three decades in the second quarter amid a resurgence of trade tensions with the United States.
Citing data published by the National Bureau of Statistics (NBS), South China Morning Post reported that the gross domestic product (GDP) growth of the world’s second-biggest economy slid from 6.4 per cent in the first quarter to 6.2 per cent between April and June. Chinese Premier Li Keqiang set a target in March for economic growth to be between 6 and 6.5 per cent this year. The figures on Monday fell within that range, The New York Times reported.
Analysts say that the breakdown of trade talks between Washington and Beijing in May and President Donald Trump’s decision to raise tariffs sharply on Chinese goods damaged the consumer confidence within the Chinese economy.
“There was certainly a surge in activity through April,” said George Magnus, a specialist in the Chinese economy, who is now at Oxford University.
“Something happened in May,” he added.
On last Friday, the Chinese government said that exports dipped 1.3 per cent in June from a year earlier, while imports fell 7.3 per cent.
In addition, the long-running trade war has further prompted many multinational companies to look at ways to shift supply chains elsewhere. But most of them still continue to invest in China to supply Beijing’s own market as well as others, especially in Asia.
“The Chinese government will continue to work hard to create a more stable, fair, transparent and predictable investment environment,” Gao Feng, spokesman for the Ministry of Commerce, said at a news briefing last Thursday.
He later added, “China has not experienced large-scale withdrawals of foreign capital.”
For now, though, the economy keeps running to a considerable extent because the Chinese government is pumping huge sums of money into infrastructure.
It is building high-speed rail lines, immense highway bridges, ports and other facilities to connect ever smaller and less affluent cities and towns to the rest of the country.
Infrastructure is making it easier to do business and move around even in some of the poorest and most remote areas of China.
But bankers and economists worry about whether some of these investments will ever earn enough of a return to cover their cost.
Magnus said, “There’s a very weak commercial basis,” adding, “for this credit-fueled infrastructure spending.” (ANI)