China Faces Economic Slowdown In Second Quarter After Trade War With US

As a consequence of the US-China trade war and the US tariffs on China, the Chinese economy has faced a slowdown in the second quarter. While the economy of China grew at 6.8% in the first quarter, it took a slight setback and grew at 6.7% in the second quarter due to the escalating trade war with the US and crimped economic activities as the government looked to cut down on debt risks. 

As reported by The South China Morning Post, the national bureau of statistics on Monday stated that the economy of China has cooled down a little when looked in contrast to growth in the first quarter. China is the world’s second-largest economy which is now under threat in the wake of the US-China trade war which is perhaps the biggest trade war in history. China has been keen on cracking down on riskier lendings which pushed up corporate borrowing costs. This has been a precedent in China for years which has now started to reflect on its economic performance as it hinders economic activities.

The central bank has been forced to pump out more cash and cut the reserve requirements for those willing to borrow. The People’s Bank Of China has cut down on the reserve requirements for lending thrice this year. The Chinese policymakers have now stepped up policy support for the economy as the domestic demand plummetted and the trade war hit the economy. Policymakers are now softening their stance on deleveraging.

As compared to last year the retail sales rose by 9% in June while the factory output grew 6% in June. The retail sales were in line with the predictions but the factory output growth missed the expectations.

The financial regulator of the nation has asked the banks to significantly cut the lending rates for the small firms in the third quarter. The same was reported by Reuters last week.

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