Jul 15, 2019

China's economic growth slumps to 27-year low amid Trump trade war

A textile factory worker in China's central Henan province. Photo: STR/AFP/Getty Images

China’s economy expanded at the slowest rate in nearly 30 years in the 2nd quarter, thanks to heightened U.S.-China trade tensions and weakening trade demand from other fragile economies.

By the numbers: The figures released by the Chinese government show the GDP came in at 6.2% — a deceleration from the previous quarter’s 6.4% annualized rate and the weakest pace of growth since the government started releasing quarterly data in 1992, per Reuters.

Why it matters: It's an indication that the prolonged trade war with the U.S. may be hurting, per Tom Rafferty, principal economist for China at The Economist Intelligence Unit. "Businesses remain skeptical that the two countries will reach a broader trade agreement and recognise that trade tensions may escalate again," he said in a note, according to CNBC.

Between the lines: China announced massive tax cuts and infrastructure investment — worth about $290 billion — this year in an attempt to shore up the slumping economy. The government has also encouraged banks to up lending to the private sector.

  • Yes, but: While the economy responded to fiscal stimulus with an initial jolt, trade pressures have dragged down growth. And there's broad skepticism among economists about the accuracy of China's GDP figures, so the numbers may be "understating the extent of the [economic] slowdown," as the New York Times points out.
  • There are "expectations that Beijing needs to announce more measures to boost consumption and investment and restore business confidence," Reuters reports.

Go deeper: The U.S.-China trade war could spark an Asian labor shortage

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U.S. GDP growth slows to 2.1% in the 2nd quarter

Data: Bureau of Economic Analysis; Chart: Chris Canipe/Axios

The U.S. economy grew at a 2.1% annualized rate in the second quarter, the Commerce Department said on Friday.

Why it matters: It's a significant slowdown from the first quarter's 3.1% growth rate, but still better than the 1.9% economists had expected. Once again, strong consumer spending offset the sharp decline in business investment and trade's drag on growth.

Go deeperArrowJul 26, 2019

The forever trade war

Illustration: Aïda Amer/Axios

Experts are beginning to worry that the trade war between the U.S. and China won't be over in weeks or even months, but has become a long-term conflict that could last for decades.

Why it matters: Bullish investors have priced a near-term positive outcome into record-high stock prices, but a growing chorus of money managers and economists says the conflict's resolution could take a very long time.

Go deeperArrowAug 2, 2019

Trump says U.S. will hit remaining $300 billion of Chinese imports with 10% tariffs

Trump and Xi at the G20. Photo: Sheng Jiapeng/China News Service/VCG via Getty Images

President Trump said in a series of Thursday tweets that 10% tariffs on the remaining $300 billion of U.S. imports from China will begin September 1, accusing Beijing of reneging on a series of promises in this year's ongoing trade talks.

Why it matters: Trump had called a trade truce after meeting with Chinese President Xi Jinping at the G20 summit in June. He said that his administration elected to take the step announced today despite "constructive" trade talks this week in Shanghai led by Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

QuotesArrowAug 1, 2019