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ECONOMY: Mixed signalsLatest data confirmed weakening economic conditions
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Latest data confirmed weakening economic conditions
By Morgan Brady

BT 201901 economy 01最新数据证实经济状况疲弱

11月的经济数据并没有呈现乐观趋势。延续上月,放缓正在持续,贸易战的影响渐渐显现。 虽然数据还是在增长,但这种增长的减速值得关注。 鉴于中国作为全球舞台上生产者和消费者的重要性,分析人士担心这种影响可能超出中国并影响到全球的经济。

零售销量减少
作为消费者的一个关键指标,零售销售放缓至8.1%的增长率,这是自2003年以来的最低水平。消费者情绪的恶化可能为未来疲弱的国内市场埋下隐患。

将继续开展改善当地条件的战略
正如习近平主席所证实的那样,中国政府将维持其目标和运动,以减少金融风险,污染和贫困。 虽然政府希望看到增长率上升,但它并不希望看到不受控制的增长,因为那只会导致泡沫。

如果中国与美国采取积极措施使得贸易紧张局势缓和,这将有可能重振两个市场并重新燃起增长希望。

November’s economic data didn’t paint a beautiful picture. The slowdown seems to be continuing from the month before, signaling that the effects of the trade war may be beginning to show. Although the data showed growth, the deceleration of that growth should warrant attention. Analysts fear that the effects may extend beyond China’s borders and reach the global economy, given China’s importance as a vital producer and consumer on the global stage.
 

Decelerating retail sales
Retail sales, a key indicator of consumers’ sentiment, slowed down to a growth rate of 8.1%, which is the slowest since 2003. A worsening consumer sentiment can pave the road for a weaker domestic market in the future. This comes at a time when everyone was looking to the consumers to help offset the negative impact of the trade war.

BT 201901 economy 02Auto sales are the main culprit
Auto sales declined by 10% from an earlier year, which seems to have been a major reason in the declining growth rate in retail sales. The tax cuts introduced by the government to stimulate spending did not work as intended. Retail sales, which include both corporate and consumer spending, amounted to 3.52 trillion Yuan, according to the National Bureau of Statistics. In October retails sales stood at 3.55 trillion Yuan. The decline took place despite Alibaba having posted record spending on a single day on November 11th, when the shopping festival took place. It also did not seem to matter much that Apple released its iPhone XR.
 

Besides the plunging car sales, consumption seems to have been held back by high household debt, and the debt service costs. The decline in car sales may indicate that sales for premium products is slowing down. Other similar products may follow the same path.

BT 201901 economy 03Industrial production weakens as well
Similarly, industrial production in China disappointed in November. Industrial production grew on a year basis by 5.4%, as opposed to expected 5.9%. This was the slowest growth in three years. In response to those figures, many global financial markets plunged, including Chinese stocks and its currency.

BT 201901 economy 04Fixed asset investments and other indicators
There have been some positive numbers, nonetheless. Investments in fixed assets increased by 5.9% in the first 11 months of 2018, slightly better than the expected 5.8%. The surveyed jobless rate declined slightly to 4.8%. And property investment grew by 9.7% on a year basis, which is close to its average throughout this year.
 

Aside from that, the Guangdong purchasing manager’s index has not been released this month. The index has a concentration of companies exporting to Europe and the U.S, and many economists look at it to gauge the effects of the trade spat. The cancellation of release came after the announcement that the statistics bureau will be in charge of conducting the purchasing manager’s index surveys.
 

The trade war is hurting both parties
The efforts by the Chinese government to stabilize growth and weather the storm do not seem to be working as planned. Tax cuts, and a dovish monetary policy, are not yielding the desired effect. But the conditions in America are not much better either. The US saw a red October in its main financial indices, and things have not improved that much in November. If the trade war is actually working as Trump intended, then it is working against both parties.

BT 201901 economy 05China takes positive steps to resolve the trade spat
Lately, China has eased some of the trade tensions by taking many steps. This includes the purchase of US Soy Beans, the delay in the “made in China 2025” ambitious tech program, reduction of import duties on US vehicles, and increasing punishments for IP thefts.
 

Many analysts believe that the effects of the trade war on exports have not been seen yet. Manufacturing data confirms this, as shipments have increased before the tariffs take effect. China’s trade balance has been impressive this year as it has already surpassed its 2017 trade record by mid November in 2018.
 

In November, China’s trade surplus with the US hit a record high, whereas China’s exports and imports for the month witnessed a fall in US dollar terms, as China’s trade balance stood at USD 44.74 billion.
 

Campaigns to improve local conditions will continue
Moreover, the Chinese government will maintain its objectives and campaigns to reduce financial risk, pollution, and poverty, as confirmed by president Xi Jinping. And while the government would like to see growth climbing, it has no desire to see uncontrolled growth that would only lead to bubbles.
 

Conclusion
China’s growth target of 6.5% for this year is still attainable. And the developments in December, the last month of the Gregorian year, are yet to be seen. Retail sales and industrial production data confirmed weakening economic conditions. The actions of the Chinese government seem to be giving some effect, but not all. This comes at a time when Chinese policy makers will gather in Beijing to attend the annual Economic Work Conference and discuss economic conditions now and in the upcoming year. If China’s positive steps with the US do work, and trade tensions ease, this will likely revive both markets and reignite growth hopes.

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