JAKARTA (TheInsiderStories) – Chinese economy decelerated to 27-years low to 6.0 percent in the latest quarter (3Q) of 2019 as the second largest economy in the world struggle to overcome the trade dispute with United States (US), the National Bureau of Statistic reported on Friday (10/18). The growth dropped compared to the 2Q of 2019 at 6.2 percent.
The agency noted, growth in industrial production jumped to 5.8 percent in September from 4.4 percent the previous month. While, the retail sales rose 7.8 percent in September compared to the same period one year ago.The bureau explained that China faced mounting risks and challenges, both at home and abroad during the 3Q of 2019.
Coordinating minister for economic affairs Darmin Nasution rated the continued decline in China’ economic growth mostly on the weakening exports. The trade war with US has hit Chinese economy and is open to continues if there is no deal between the two countries.
An even bigger impact on the Chinese growth come from cooling domestic activity, including consumer spending and investment. Based on the bureau data, retail sales growth declined to 8.2 percent over a year earlier in the 1Q of 2019, down from the 2Q’ 8.4 percent.
China’ exports to the America, its biggest foreign market, fell 21.9 percent in September compared to a year ago. That helped to drag down overall Chinese exports by 1.4 percent. Imports of American goods also sank 15.7 percent.
In term of investment, the bureau noted that in the 3Q of 2019, the investment in fixed assets (excluding rural households) was $46.12 trillion, up 5.4 percent and the private investment grew by 4.7 percent.
Based on the custom office data, the country still experienced surplus $2.98 trillion in nine months (9M) and in September worth of $396.5 billion. The import growth also slowed sharply in the last quarter and now looks very weak compared to the economic growth.
In details, China total export and import during January to September recorded $33.52 trillion and in September only valued $3.96 trillion. In terms of export only, the values $2.18 trillion, lowered 0.7 percent compared to last year (YoY) and in 9M period $18.25 trillion. While imports $1.78 trillion in september or down dropped 6.2 percent YoY and in 9M worth of $15.27 trillion.
In Renmimbi terms, the exports up 5.2 percent, although imports had to fall 0.1 percent. With these results, during the 9M of 2019, China managed to post a surplus of RMB2.05 trillion.
Behind the rising exports in the January-September period, Chinese exports to the US actually dropped sharply. Noted, Chinese exports to the US decreased 10.3 percent from the same period last year.
China’ trade with US is falling sharply with no sign of progress toward ending a worsening tariff war. Chinese exporters also face pressure from weakening global consumer demand at a time when Beijing is telling them to find other markets to replace its major market.
Latest reports said, US and Chinese negotiators has talked last week. Beijing has said Donald Trump’ punitive tariffs must be lifted once an agreement takes effect while Washington says some must stay to ensure Beijing carries out any promises it makes.
In their latest escalation, Washington imposed 15 percent tariffs on $112 billion of Chinese imports and plans to hit another $160 billion on Dec. 15. That would extend penalties to almost everything the United States buys from China. US tariffs of 25 percent imposed previously on $250 billion of Chinese goods are set to rise to 30 percent on Oct. 1.
Beijing responded by imposing duties of 10 percent and 5 percent on a range of American imports. More increases are due on Dec. 15 in line with the US penalties. China has imposed or announced penalties on an estimated $120 billion of US imports.
Some have been hit with increases more than once, while about $50 billion of US goods is unaffected, possibly to avoid disrupting Chinese industries. Beijing also has retaliated by canceling purchases of soybeans, the biggest single US export to China.
The Chinese government has agreed to narrow its trade surplus with the US but is reluctant to give up development strategies it sees as a path to prosperity and global influence.
Beijing is predicted holding out in hopes Trump will feel pressure to make a more favorable deal as his campaign for the 2020 presidential elections picks up. Trump has warned that if he is re-elected, China will face a tougher US negotiating stance.
Following the development, analysts at Nomura see China’ economic growth dropping to 5.8 percent in the 4Q of 2019, as exports are hit again by the slowing global economy and the trade conflict.
Previously, the International Monetary Fund cited the US – China tariff war as a factor in this week’ decision to cut its 2019 global growth forecast to 3 percent, from its previous outlook of 3.2 percent.