China’s slow GDP growth is a result of the trade war with the U.S., impacting production, export and imports
As per the latest data released by the National Bureau of Statistics (NBS), People’s Republic of China, today, i.e., Friday, January 17, 2020, the country recorded its weakest Gross Domestic Product (GDP) growth in the past 29 years, with official figures standing at 6.1% in 2019.
The release of the data gains significance as it comes a day after China and United States (U.S.) officially signed the Phase-I of the trade deal, ending the 18-month long trade war. The Chinese Government had predicted the growth to be between 6% and 6.5%. These figures also match the forecast of International Monetary Fund (IMF) and the World Bank.
The factors responsible for the slowing of the economy were rising debt, falling domestic demand and the trade war with the U.S., impacting production, export and imports. Although the Government took measures like tax cuts and monetary stimulus regularly, but they failed to provide the much-needed respite to the economy.
Industrial production, which gauges China’s output in manufacturing, mining and utilities, grew by 5.7% as against 6.2 in 2018. The retails sales grew by 8% as against the growth of 9% in 2018. The fixed asset investment which grew by 5.4% as compared to 5.2% in 2018.
However, the breather came in December 2019 when the prospects of trade deal with U.S neared. The industrial production grew by 6.9% in December 2019, way above analysts’ forecasts of 5.9%. Exports in December grew by 7.6%, up from -1.3% in November 2019. The imports went to 16.3% in December from 0.3% in November.
Praising the growth, the Spokesperson for NBS – Ning Jizhe said that for the first time in history, the China’s per capita income rose above U.S. $ 10,000 last year.
Speaking at a Press Conference, Ning said, “China’s pace of progress is unstoppable. It showed that the quality of China’s economic development is improving.”
Signed by the President of U.S. – Donald Trump and Vice Premier of China – Liu He, the new deal is expected to help Chinese Government in reviving the economy. The trade deal states that as compared to 2017, China will spend U.S. $ 200 billion more for buying American goods and services, over the next 2 years. The amount of purchases to be made across manufacturing, energy, agriculture and service sector would be in tune of U.S. $ 77 billion, U.S. $ 52 billion, U.S. $ 32 billion and U.S. $ 38 billion respectively.
According to analysts, the Phase – 1 agreement of the trade deal is only an interim agreement and a medium to trigger the next level of negotiations.
Separately, the Trade Commissioner of European Union (EU) – Phil Hogan has termed the deal as negative for competitiveness and jobs. The EU believes that Chinese companies would be forced to buy more American goods and services than the European nations. He also said that EU will examine whether the deal is in compliance with the rules of World Trade Organisation (WTO).
