China's economic growth cooled to its weakest pace since the global financial crisis in the third quarter,with regulators pledging further policy support as a years-long campaign to tackle trade war and the debt risks with the United States began to bite.Chinese authorities are trying to face numerous challenges, as the trade war fears have sparked a blistering selloff in domestic stock markets of the country and a steep decline in the value of the yuan versus the dollar was observed which in turn heightened worries about the growth outlook.the economy grew 6.5% in the third quarter from a year earlier, slower the 6.7% in the second quarter, the National Bureau of Statistics said.The trend of slowdown is strengthening despite Chinese authorities' pledge to encourage domestic investment to support the economy.Domestic demand turned out weaker than unexpectedly solid exports.after several days of decline int the stock market, the Governor of the Central Bank of China, Yi Gang, pledged targeted measures to help ease firms' financing problems and encourage commercial banks to boost lending to private firms.Recent economic data have pointed to weakening domestic demand with softness across factory activity to infrastructure investment and consumer spending, as a multi-year crackdown on riskier lending and debt has pushed up companies' borrowing costs.experts believe growth could slow even more dramatically next year.
China's trade war with the US has hurt its economy bad. Both the nations have been in a constant tariff s wars in the recent months, sparked by the US president Donald Trump's demands for sweeping changes to China's intellectual property, industrial subsidy and trade policies.
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Entrepreneur | Posted on
Foremost, it’s not just China. It’s the entire world.
We’re going through a global economic slowdown. The fear of recession looms high in the USA. And if that happens, and when the Fed changes its interest rate, it’s going to affect the whole world.
(Courtesy: Owl Financial Management)
Even if you look at countries individually, top economies are showing signs of a downturn. It includes everyone from France and Germany to the UK, China, and India.
Only a few days back, Economic Times published an article titled “Global recession coming soon! Yield curves invert in US & UK”. Give it a read here.
Many of the experts and economists believe that the world is entering into economic downturn.
And honestly, it’s quite expected. Since the last recession in 2009, we’ve had one of the longest stretches of a boom period in decades. We are in the last phase of the recovery period. Consumer spending, a critical determinant, is decreasing in major economies.
The growth has slowed down. The inflation is too low which leaves central banks very little room to flex their monetary policies to thwart back the possibility of a recession.
And then, of course, there’s the ongoing trade war between the USA and China which is affecting many big countries.
(Courtesy: University of Pennsylvania)
Then there’s also the worry of Brexit. Britain’s new PM Boris Johnson has worsened the already-complicated affair, claiming that the UK will leave EU with or without any deal on October 31st. If a favorable deal isn’t made between the two parties, which is unlikely to happen really, it can affect the UK’s economy. And when that happens, that will cascade to affect other countries that the UK is in direct trade with. This will shake the global economic picture for worse.
(Courtesy: Evening Standard)
There are many things that are going globally that hints of an upcoming recession. And as interesting as it may sound to the headline readers, elites and fear mongers, this is quite a serious matter that would affect billions of lives.
The pain and aftermath of the last recession still stand fresh.
BUT coming to your exact question about China in particular…
Yes, China’s GDP growth is at its lowest since the last global financial crisis. Its YoY quarterly GDP reading is the weakest since 2009.
(Courtesy: Fortune)
Previous year in the third quarter, its economy grew by 6.5 percent, which was slower comparing to the second quarter. This year, between July and September, experts believe that the economy grew by 6.6 percent – a meager 0.1 increase.
The demand in China has weakened. People are spending less money. There’s less investment in the infrastructure, despite the government’s efforts.
The trade war between the USA and China has weakened China’s currency and this is putting strains on its economy. To boost local spending, China’s central bank lowered its Reserve Requirement Ratio, making financing cost a bit cheaper. This can certainly help the economy find much more stable ground. But they have to be careful about inflation.
(Courtesy: CNN)
Honestly, every country, even with an open economy, has become quite insular. In India, the situation is no different. Growth has cooled down with slowdown in many industries.
This is one of those times when countries must work together to tackle the beast that lies ahead. Acting individually in self-interest might not necessarily be a good idea. Because even if one big country’s economy collapses, it’s going to affect virtually the entire world. And, in India, we don’t have that infrastructure and economists like Manmohan Singh who shielded India in the last global recession, to keep our economy untouched and unscathed.
(Courtesy: The Economic Times)
Hope this answers your question.
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