Chennai: China’s trade war with the US has been escalating and now the asian country has felt the brunt of it as latest figures show growth is at its slowest for almost a decade.
With winter approaching, the Asian stock market has been rattled on consumer fears of a slowdown in economic growth, with stocks plunging to an almost four-year low this week. The yuan also ended trading yesterday at its weakest close against the US dollar since January 2017.
Latest figures showed the economy in China grew less than anticipated, with a 6.5 per cent increase year-on-year in the third quarter. This is down on expectations for a 6.6 per cent growth, and is lower than than 6.7 per cent year-over-year expansion in the previous quarter. But positively, the nation is still on track to meet an official growth target this year of around 6.5 per cent.
China’s economy grew 1.6 per cent on a quarter-by-quarter basis, according to the National Bureau of Statistics. The economy grew 6.7 per cent year-over-year until September.
China stocks have faced a turbulent year as the value of global shares bear the brunt of an escalating trade war, further being heightened by policy tightening by the US Federal Reserve.
Washington has so far slapped $250 bllion of tariffs on Chinese products. This saw China retaliate with 10 percent tariffs on $60 billion of US imports.
The tariffs stem from the Trump administration’s demands that China make sweeping changes to its intellectual property practices.
The US also wants Beijing to rein in high-technology industrial subsidies, open its markets to more foreign competition and take steps to cut a $375 billion US goods trade surplus.
More than just tariffs
Trade actions have also begun to move past tariffs with the Trump administration imposing sanctions on China for importing weapons from Russia under a law intended to punish the latter for meddling in the 2016 election.
The US is also withdrawing from the Universal Postal Union, a 144-year old treaty that helps set international postal rates, over concerns that the treaty unfairly advantages Chinese exporters.
China has stated that it does not plan to make concessions to the US in the face of rising tariffs. China’s Minister for Commerce, Zhong Shan, in his recent statement said, ‘There is a view in the US that so long as the US keeps increasing tariffs, China will back down. They don’t know the history and culture of China. This unyielding nation suffered foreign bullying for many times in history, but never succumbed to it even in the most difficult conditions.’
China also responded to the new US tariffs by cutting its own tariffs on non-US goods to help bolster its economy.
|Confidence in decline|
|The trade war between the United States and China is beginning to weigh on business sentiment among small to medium-sized employers, with overall confidence for the fourth quarter at its lowest level since the beginning of last year, according to a new survey.
Sentiment for the final three months of the year dropped 6.7 points to 43 on a quarter-on-quarter basis, in the Standard Chartered Hong Kong SME Leading Business Index, with the largest drop in confidence in the import, export and wholesale area. Confidence had not dipped to that low of a level since the first quarter of 2017 when it hit 41.9, according to the index.
Nearly half of the businesses surveyed said they believed the trade tensions will last for more than one year, the Hong Kong Productivity Council and Standard Chartered said at a press conference recently.