Analysts and investors have reiterated warnings about the instability of the Chinese economy after new reports found that the country’s rapid growth had taken a sharp hit over the last year.
Still embroiled in a trade war with the United States, the country reported its slowest growth in the economy in twenty-six years with an average rise of 6% in the last quarter.
Huge Power
The country, which has been defined by its upward spiral of economic growth for decades, is now such a key player in the global economy that even this slight decline could spell catastrophe for the Asian stock markets and for the world economy at large.
China has only been releasing its figures on domestic economic growth for the last twenty-six years and the country’s ruling Communist Party has set an annual 6% threshold for growth to ensure China’s ongoing prosperity.
But their newest report seems to have confirmed what investors were concerned about: that China is feeling the heat from their ongoing trade battle with the United States.
Largest Economies
The two economies – which are the first (US) and second (China) largest in the world, respectively – have dominated global financial news over the last year as the US President ramps up attacks on the Asian nation and threatens to increase tariffs on goods.
Analysts have been warning for months that the ongoing dispute would hurt both US and Chinese consumers and this sudden slowing of Chinese growth seems to have confirmed these fears.
Whilst many believe that China often inflates their growth figures as a symbol of continued power on the world stage, the admittance that growth has decreased over the last quarter is the first inkling that the country is taking a hit from the trade war.
Economists have also stated that a decrease in consumer spending was also to blame for the sudden economic downturn.
They predict that the economy might get worse before it gets better – particularly if talks once again break down between Chinese trade negotiators and the United States.
Investors have suggested that, whilst other factors played a part in the downturn, it is the trade war that is proving to be the most damaging.