China’s economy grows slowest since 1992 pace. Dynamics of GDP in the third quarter slowed to 6%, and will soon fall well below that mark. This will have an impact on Russia. While the official figures may be overstated, experts believe.
The Chinese economy shows weakest since 1992 the GDP growth rate. In the third quarter it amounted to only 6%. Such data are published by national service of statistics of China.
This is the weakest quarterly pace in 27 years. GDP growth in the first quarter was 6.4%, the second at 6.2%.
In just nine months of this year, Chinese economy increased by 6.2%. Meanwhile, the growth of industrial production during the same period was 5.6% yoy. In September compared to August, industrial production growth amounted to 5.8%.
The official representative of the National Bureau of statistics, Mao Shenyun after the release of new GDP data, acknowledged that China’s economy will continue to face challenges. He referred to the pace of a global economic slowdown and increasing uncertainty.
The country is faced with growing risks and challenges both inside the country and abroad, recognized by the Bureau. But not on a trade war with the United States in the official reports is not mentioned.
Target rate of economic growth in China — from 6 to 6.5% in annual terms. The International monetary Fund’s forecast is a bit different: 6,1% growth for the end of 2019 and 5.8% in 2020.
Last year the Chinese economy grew by 6.6%. The reason for the slowdown of the Chinese economy is obvious and lies in the trade war with the United States, experts say.
“The escalation of trade wars led to the slowdown in world trade growth that has already begun to affect the Chinese economy. Apparently, the slowdown will continue in 2020 and growth rate of Chinese GDP will be below 6%,” — said the chief economist of Sberbank Anton Struchenevsky.
But it is not only in the escalation. Earlier in China poured a lot of money, particularly in infrastructure projects — building roads, bridges and houses, thus generating growth.
“Now this model is gradually exhausts itself,” explains “Газете.Ru” project Manager of the rating Agency “Expert RA” Vita Spivak.
So, according to her, is slowly changing the structure from export-oriented economy that is dependent on trade and inward investment, “she moves into more qualitative growth based on domestic demand potential, innovation,” says Spivak.
While official figures are likely embellished. Real evidence of slowing growth in China may be much lower. That statistical indicators are likely to be inflated, can be seen in declining trading turnover of China with other countries, recognizes the Professor of economic theory REU them. G. V. Plekhanov And Ekaterina Novikova.
Thus, the turnover between China and the United States in January-August this year decreased by 13.9% (to $355,6 billion) compared with the figure of 2018 in the same period.
“Statistics in China is going on all the courts: from the lowest, starting from the prefectures, to large provinces and cities. Usual economic statistics is a KPI [eng. Key Performance Indicator, key performance indicator achievement of efficiency — “Газета.Ru”] Chinese officials, so that the risk of fraud,” explains Vita Spivak.
Meanwhile, the effect of China’s slowdown could feel the whole world, including Russia.
This happens, in particular, due to the fact that China can reduce the consumption of hydrocarbons. And this in turn will have an impact on the Russian economy, which is still very heavily dependent on exports of raw materials.
“For its size, the Chinese economy is the second in the world. It is obvious that its slowdown will affect other countries.
The IMF estimates that the slowdown in China’s growth rate by 1% leads initially to a slower release in the rest of the world 0.1%, but this effect begins to increase and in the third year, the slowdown in the rest of the world is already 0,4%,” continues Struchenevsky.
After the publication of statistics in China the Asian stock market went down. Hong Kong’s Hang Seng Index (HSI) and China’s Shanghai Composite Index ended with a fall of 0.5% and 1.3% respectively.
Figures on GDP followed a week later after an unexpected step to trade truce with the United States. At the end of the round of negotiations on trade 10-11 October it became known about a partial agreement. The US and China came to a “significant first phase” of the trade deal, said after the American President Donald trump.
Both sides then made concessions, Beijing — in a very painful for American farmers and agriculture, and Washington — decided to postpone the increase in duties on products from Podnebesnoy.
In particular, the Chinese government has promised to increase the purchase of agricultural goods from the US worth $40 to 50 billion, reported at the White house. In China, this figure is not confirmed, saying that the purchase of products of farmers will be implemented depending on the needs of the Chinese market, wrote The Washington Post.
After negotiations with Vice Premier of China Liu he reported that the parties can sign a trade agreement in the next five weeks. That is closer to the beginning of December 2019.
But countries remain far from achieving any comprehensive agreement in the field of trade, experts believe. The next stage of trade negotiations suggests a meeting next week of the Minister of Finance of the USA Stephen Mnuchin and US trade representative Robert Leitheiser with Chinese Vice-Premier.
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