What threatens the global economy with a slowdown in China?
January 21, 2019 12:25 pmVideo
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The Chinese economy in the fourth quarter did not withstand the pressure caused by a decline in domestic demand and a sharp increase in US tariffs, which led to a slowdown in growth in 2018 to its lowest level in three decades. Beijing will be forced to deploy additional incentives to prevent a more severe slowdown.
The growing signs of weakness in China, which in recent years has generated almost a third of global growth, are worrying about risks to the global economy and already affect the profits of many companies, ranging from Apple to large automakers. This year, the authorities declared greater support in order to reduce the risk of massive job losses, but excluded “aggressive incentives”, thanks to which Beijing was able to restore growth in the past, but caused a lot of debts. Now the government has the means to support the economy. They can increase infrastructure spending and reduce the statutory reserves of banks. Therefore, there is no point in worrying about financing, the problem is consumption. As tensions between the United States and China increase, consumer sentiment suffers. Until recently, steady wage growth supported consumption, but now there is concern about the future.
The National Bureau of Statistics reported that in the fourth quarter, GDP grew at the slowest pace after the global financial crisis, dropping to 6.4 percent year-on-year from 6.5 percent in the third quarter. This led to a decrease in annual growth to 6.6 percent, the slowest since 1990. However, some observers, including those from China, believe that the actual growth was weaker than the official data show. It is believed that even if China and the United States agree on a deal, it will not be a panacea for China and its exporters.
The material has been provided by InstaForex Company – www.instaforex.com
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