Weak Chinese GDP Growth Is Shaking Global Markets

Credit: Roy Issa

China’s quarterly GDP growth is slowing down to lows not seen in decades and it’s rattling global markets.

“Looking quarterly, the first quarter growth is 6.4 percent, the second is 6.2 percent and the third is 6.0 percent,” reported National Statistics Bureau spokesman Mao Shengyong.

Chinese economic growth has fueled much economic activity around the world over the last few decades. Now, the Chinese economy appears to be losing its momentum amid trade disputes and a slowing global economy. The world’s eyes were particularly fixed on the 6% growth figure for the third quarter of 2019. This 6% figure is the lowest growth that China has seen since records began in 1992.

When it comes to explanations for this slowing growth, there are several apparent reasons. The data out of China suggests that both imports and exports are falling. Most of the blame for this fact falls on the ongoing and escalating trade war between the US and China. At the moment, tariffs are scheduled to be ramped up later in the year, but both sides have expressed high hopes for an agreement before that time. Trade talks that are taking place this week are expected to foreshadow a deal expected to come in November. Should the two sides fail to reach a deal, the trade war will grow more damaging.

China, for its part, is in need of economic stimulus right now. Analysts suggest that China’s options for economic stimulus are limited at the moment, as the country is being weighed down by debt equal to more than 300% of its GDP, according to the Institute of International Finance. Given this somber economic forecast, it’s no surprise that the markets have reacted quickly. Chinese shares had their worst day this month this week, with Shanghai’s benchmark index falling by 1.3% at the close.

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