Published: Tue, July 16, 2019
Money | By Ethel Goodwin

China's economic growth slides to lowest level in 26 years

China's economic growth slides to lowest level in 26 years

BANGKOK (AP) - Global shares were mixed Monday after China reported that its economy grew at the slowest pace in at least 26 years in the last quarter, leading investors to opt for caution despite Friday's record highs on Wall Street.

On Monday, the Chinese government said its economy had grown at a 6.2 per cent annual rate in the second quarter, the lowest rate in 27 years.

- Fixed-asset investment grew by 5.8 percent year on year in H1, 0.2 percentage points faster than the growth in the first five months.

Meanwhile, China's production of coke, used in steelmaking, rose 10.7% year-on-year in June to 41.69 million tonnes, with year-to-date output reaching 233.87 million tonnes, up 6.7%, the data showed. The GDP figures are within the government's target range of 6.0-6.5 per cent for the whole year, down from the 6.6 per cent growth China put up in 2018.

Mao Shengyong, spokesperson for the NBS, noted that e-commerce is a major driver of China's retail economy. The bigger the economy gets, the harder it is to keep growing at the same pace. Trump claims his economic policies towards China make the trading relationship between the two countries "more fair and reciprocal". In 2012, the working age fell by 3.45 million, in 2013 it dropped by 2.44 million, in 2014 it fell by 3.71 million, and in 2015 it fell by 4.87 million.

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At the G20 summit in Japan last month, Trump had vowed not to impose new tariffs on China.

However the benefits of the one -child policy began to peter out and in 2012, the ratio of working-age people to total population peaked.

Slowing growth in China has raised concerns about the potential knock-on effect on the global economy. Paying back the credit can take years.

US President Donald Trump in a tweet linked China's slowing growth to the US tariffs.

Among major economies, Australia sent 35 percent of its exports to China in April, Brazil 30 percent and South Korea 24 percent, according to the Peterson Institute for International Economics. China accounts for 13% of foreign direct investment - including corporate mergers and new factories - in Egypt, up from 1% in the mid-2000s, and 8% of Pakistan's, up from 2%.

"China trade war was an important factor and we think this will persist", Tom Rafferty, principal economist, China at the Economist Intelligence Unit, told CNN.

The figure didn't do much to disappoint investors, however, with analysts polled by Reuters picking such a figure ahead of the release, and other data pointing to some buoyancy in the economy.

"This worries us", she said.

Better-than-expected retail sales data also lend credence to the idea that stability will emerge in the second half of the year. Chinese exports to the United States fell 7.8 per cent in June from a year, depressed by Trump's penalty tariff hikes.

Edward Moya, senior market analyst at Oanda, said the latest economic data "shows the slowdown remains intact and markets should expect further stimulus" from China's central bank later this year.

Analysts said the wider figures showed falling demand both at home and overseas as the wider global economy feels the effects of the tariff battle between the world's two largest economies.

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