The growth of China’s industrial production continues to slow down. In August, reported Reuters, it fell to its weakest point in seventeen and a half years in the middle of a trade war with the United States and a decline in domestic demand.
Retail sales, construction, and investment gauges also worsened which could lead China—according to analysts consulted by Reuters—to cut some key interest rates this week for the first time in more than three years “to prevent a sharper slump in activity.”
Experts also suggested that the world’s second-largest economy needs to roll out more stimulus to ward off a sharper slowdown.
Industrial production growth declined by 4.8% in July, and by 4.4% in August. Delivered industrial exports fell 4.3% on-year, the first monthly decline in at least two years, Reuters said, reflecting the toll that the escalating trade war between China and the Unites States is having on Chinese economy.
“The U.S.-China trade war has taken a toll on the Chinese economy. In August, China’s PPI (producer price index) fell to its lowest level in three years,” analyst Mohit Oberoi told Market Realist.
“China’s car sales also fell last month, and China’s exports to the U.S. fell sharply,” he added.
Little optimism about China’s situation
According to an August survey of members of the U.S.-China Business Council, “optimism about China is at a historic low,” so more and more U.S. companies are “are halting investment,” the Wall Street Journal reported and said that only a “slight majority of companies expect their revenue in the country to rise next year.”
The Chinese communist regime, which let the yuan devalue days after President Donald Trump announced he would impose new tariffs on Chinese products from Sept. 1, responded with new tariffs in retaliation.
Then President Trump replied by stating that he would raise tariffs again in the coming months, specifically in October and December.
Although both powers are willing to resume negotiations in October, most analysts do not foresee a lasting trade agreement, which would lead to a sharpening of the slowdown in the short term.