China’s economic growth slows amid trade battle with US

Author: 
AP
ID: 
1539919616938492400
Fri, 2018-10-19 (All day)

BEIJING: China’s economic growth slowed further in the latest
quarter, adding to challenges for communist leaders as they fight a
tariff battle with Washington.
The world’s second-largest economy expanded by 6.5 percent over a
year earlier in the three months ending in September, government
data showed Friday. That was down from 6.7 percent for the quarter
ending in July and 6.8 percent for the year’s first three
months.
Forecasters expected China’s economy to cool after Beijing
tightened credit controls last year to rein in a debt boom. But the
slowdown has been sharper than expected, prompting Chinese leaders
to reverse course and encourage banks to lend.
Communist leaders express confidence their $12 trillion-a-year
economy can survive the conflict with US President Donald Trump.
But export industries have begun to suffer from American tariff
hikes of up to 25 percent on Chinese goods.
Economic performance was “stable overall,” but “we must also
see the number of external challenges has increased
significantly,” said a government spokesman, Mao Shengyong.
“Downward pressure has increased,” Mao said at a news
conference.
Growth in retail spending and investment in factories and other
fixed assets, which are much bigger parts of the economy than
trade, slowed in the latest quarter, though to still-robust
rates.
Retail sales rose 9.1 percent over a year earlier in the first nine
months of the year, down 0.1 percent from the first half, according
to the National Bureau of Statistics. Investment in factories and
other fixed assets rose 5.4 percent in the first three quarters,
down 0.6 percent from the first half.
Beijing has rejected US pressure to scale back industrial
development plans Washington says are based on stealing or
pressuring foreign companies to hand over technology. American
officials worry they might threaten US industrial leadership.
The conflict with Washington has prompted communist leaders to step
up the pace of a marathon effort to encourage self-sustaining
growth driven by domestic consumption and reduce reliance on
exports and investment.
Beijing has announced tariff cuts, announced plans to end
restrictions on foreign ownership in the Chinese auto industry and
taken other steps to rev up growth. But leaders have rejected
pressure to scrap plans such as “Made in China 2025,” which
calls for state-led creation of Chinese champions in robotics and
other technologies.
Washington, Europe and other trading partners complain those plans
violate Beijing’s market-opening commitments.
Beijing has responded to previous downturns by flooding the
state-dominated economy with credit, but that has swelled debt. The
ruling Communist Party has told banks to step up lending,
especially to private entrepreneurs who generate China’s new jobs
and wealth, but has avoided a full-scale stimulus. Forecasters say
it will take the measures some time to work their way through the
economy.
Washington has raised tariffs on $250 billion of Chinese goods and
Trump says he might extend penalties to almost all imports from
China. Beijing responded with its own tariff hikes on $110 billion
of American imports but is running out of goods for retaliation due
to their lopsided trade balance.
Forecasters say if threatened tariff hikes by both sides are fully
carried out, that could cut China’s 2019 growth by up to 0.3
percentage points.
September exports to the United States rose 13 percent despite the
tariff hikes, down slightly from August’s 13.4 percent. The
country’s politically volatile trade surplus with the United
States widened to a record $34.1 billion.
Chinese exporters of lower-value goods such as clothes say American
orders fell off starting in April as trade tensions worsened. But
makers of factory equipment, medical technology and other
high-value goods express confidence they can keep their market
share.
Trade accounts for a smaller share of the economy than it did a
decade ago but still supports millions of jobs.
On Thursday, the Commerce Ministry promised official help for
companies that have suffered due to the American import
controls.
“In general, the impact is limited,” said a ministry spokesman,
Gao Feng. “Governments at all levels will also take active
measures to help enterprises and employees cope with possible
difficulties.”

Main category: 

US government refrains from calling China a currency
manipulatorChina manufacturing weakens amid US tariff battle
Source: FS – All-News-Economy
China’s economic growth slows amid trade battle with US