Published: Tue, July 16, 2019
Markets | By Otis Pena

China Second Quarter GDP Growth Slows To 27-Year Low

China Second Quarter GDP Growth Slows To 27-Year Low

The country's gross domestic product grew at 6.2 per cent in the second quarter, its slowest rate in almost three decades and lower than the 6.4 per cent recorded last quarter, according to government figures released today.

Data showed India's economy grew to the lowest level in over four years during the first three months of this year, Thailand's growth was weakest in more than four years, Singapore's 1Q growth hit a decade low, Hong Kong's GDP growth was weakest in a decade, and the Philippines' growth dropped to a four-year low of 5.6%.

US President Donald Trump on Monday portrayed America as being on the winning end of his trade war, saying tariffs are punishing China's economy while generating billions of dollars for the United States, an economic victory that will allow him to continue his fight without domestic harm. Growth on our own industrial production index, based on the output volumes of individual products, slowed in June, from 3.2 percent y/y to 2.9 percent.

"There's no doubt in anyone's mind that the trade war is a major contributing factor here", noted Oanda analyst Craig Erlam.

Chinese shares were down before Monday's data release, after which they pared losses and then produced gains for the day. But economists warn their truce is fragile because they still face the same array of disputes that caused talks to break down in May.

"The slowdown in Chinese economy leads to think that China is giving a solid support to the economy to soften the impact of the trade war with the U.S. and will certainly continue doing so in the coming quarters".

President Trump and Chinese President Xi Jinping vowed to resume trade talks after meeting at the G-20 summit in Japan in June. Going forward, the slowdown in trade will have an impact on domestic demand and growth will be at 6.2 percent in the second half.

A gauge of global stocks advanced on Monday as economic data from China came in as expected, although stocks on Wall Street were little changed as financials showed some weakness in the wake of Citigroup's C.N earnings report.

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While more upbeat June factory output and retail sales offered signs of improvement, some analysts cautioned the gains may not be sustainable, and expect Beijing will continue to roll out more support measures in coming months.

China's economy has slowed to its lowest growth rate in 30 years.

"China has been surely hurt more in the trade war", said Peng. He added that, despite some existing external uncertainties and a complex situation, China maintains steady economic growth.

- China's job market remained stable in June, with the surveyed unemployment rate in urban areas standing at 5.1 percent, up 0.1 percentage points from the previous month.

However, the trade war with the U.S. has hit China's economy, compounding a global slowdown.

It said that over the first half of the year, China's economy grew by 6.3 percent.

Eventually, weaker stock prices could undermine US consumer confidence and the American economy, she said. Much of the business activity is shifting to other low-priced countries, like Vietnam, with a transition cost attached for United States companies that depend on them.

Yet a slowdown in manufacturing in China is a concern - and is only partly due to the trade war, she said. That has shored up growth but set back efforts to reduce reliance on investment, which has pushed debt to levels that prompted credit rating agencies to cut China's credit rating.

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