China worries about weak growth

Statistics show that the economy is running out of steam. The authorities admit that "maintaining growth of 6% or more is very difficult".

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Chinese Premier Li Keqiang in Beijing on September 10. POOL New / REUTERS

Chinese Deputy Finance Minister Liao Min is due to visit the United States on Wednesday (September 18th) to prepare for the resumption of trade talks between Beijing and Washington scheduled for October. The Chinese are clearly under pressure. Beijing can get ready – day and night – for the ceremonies of 1st October marking the 70e Anniversary of the arrival of the Communists in power, the mood is gloomy. On Monday, Prime Minister Li Keqiang, on his way to Moscow, acknowledged that "For China, maintain growth of 6% or more (Was) very difficult in the current context of a complicated international situation ".

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But Chinese authorities are officially planning a growth "Between 6% and 6.5%" this year. This amounted to 6.3% in the first half, over one year. Li Keqiang talks about "Stability" but the deceleration of growth seems obvious. The same day
A disappointing index has been published: industrial production growth has fallen to 4.4% year-on-year, its lowest level since 2002. Although household consumption is about good, it is still slightly down: 7.5% against 7.6% in August. Not only are these figures unsatisfactory, but they are questionable.

In August, car sales fell 9.9% from August 2018. Over the last fifteen months, this index has dropped fourteen times. Since July, even electric vehicles are taking a dip, due to a less accommodative subsidy policy. After a 4.7% drop in sales in July, sales fell 16% in August. A spokesman for the Bureau of Statistics acknowledges: "We must keep in mind that instability and uncertainty at the international level are becoming increasingly important. "

Measures to support the economy

China, which has already unveiled measures to support its economy in autumn 2018, regularly announces new devices. On Monday, the Central Bank reduced its reserve requirement ratio, so that banks could give more credit to private companies. This theoretically amounts to injecting about 900 billion yuan (about 115 billion euros) into the economy, but so far, these measures have not encouraged banks to take more risks.

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The structural slowdown in growth is accentuated by the trade war with the United States. In August, exports fell by 1% year-on-year, and imports by 5.6%. Price stability is also misleading. Inflation remains unchanged at 2.8%, but this index masks significant disparities. The producer price index for industrial goods is negative (-0.8% year-on-year); on the other hand, pork prices jumped by 46% year-on-year, due to the swine fever epidemic, but also tensions with Washington.

Given the importance of pork in household consumption, the subject is explosive. Hence the announcement by Beijing, September 13, the elimination of tariffs on pork imported from the United States. Clearly, for China, a truce in the trade war would be more than welcome.


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