Chinese growth slowest in a decade as trade tensions continue

China’s economy has had its slowest growth rate in almost a decade, with quarter three year-on-year GDP growth reported at 6.5 percent – just under expectations of 6.6 percent. Although this growth rate is related to long term economic trends and not necessarily an effect of the ongoing trade tensions, analysts suggest that this could have contributed, according to the Financial Times. 

This comes after the implementation of financial loosening measures in the face of several stresses, including the Renminbi’s depreciation, increasing debt levels and slower investment in infrastructure and property. Additionally, escalating trade tensions have seen tariffs imposed on billions worth of Chinese exports to the US. On Thursday the Renminbi dropped to a 21-month low against the dollar, however, following the release of China’s quarter three economic data, the value of the Renminbi was basically unmoved.

Top economic officials made attempts to boost confidence in China’s economy, stock markets and Beijing’s reform programmes, insisting that China would maintain long-term stable economic growth. Vice-premier Liu He, in rare public remarks, suggested that fears over the trade war were exaggerated. He was quoted in the Financial Times as saying: “If you analyse China’s economy by focusing only on one thing or one period, you might feel it faces difficulty […] But if you look at it from a larger historical perspective, the outlook is very bright.” 

This week US president Donald Trump pulled out of the Universal Postal Union (UPU), an agreement that offers low rates for foreign postal services sending small packages to the US, The Straits Times reported. This is set to disadvantage China as the agreement gives developing nations lower shipping rates than developed nations. Through the UPU, China was provided with a US$170 million annual subsidy to ship products directly to the US, which had helped fuel the large market of cheap consumer goods flowing from China to US consumers on platforms such as Amazon and eBay. This latest move follows a pattern of the US withdrawing from international multilateral organisation and treaties, and is the latest in a series of moves designed to increase the competitiveness of US producers.