China’s economy continues to slow due to falling exports, slowing factory output, and anemic investment growth that is now at a record low.
The latest details concerning China’s economy were released Thursday and they do not paint a positive picture. Industrial output rose 4.7% from a year earlier compared to a median estimate of 5.4%; retail sales expanded 7.2% compared to a projected 7.8%; and fixed-asset investment slowed to 5.2%, the lowest reading in comparable data back to 1998.
However, even as the Chinese economy slows, the government and central bank in Beijing have resisted dumping stimulus into the economy, preferring instead to make small adjustments to try and boost growth.
China’s Ministry of Commerce spokesman Gao Feng said on Thursday that removing existing tariffs is an important condition for any deal and that China is willing to address core concerns with the U.S. to create conditions for reaching a phase-one trade deal.
Chinese and some U.S. officials last week said they agreed to roll back some tariffs if there is a phase-one deal. But the optimism was quickly damped as U.S. President Donald Trump said that he hasn’t agreed to anything. The trade war has lasted more than a year and hurt the global economy.
Any re-escalation of the trade war would further hit investor sentiment. The investment data released on Thursday shows how cautious private companies have become, with their spending in the first 10 months of the year at the lowest level since 2016. The continued stability in spending by state-owned firms is preventing an even stronger drop in the headline data.
The People’s Bank of China has made various small policy adjustments to increase the flow of credit and stimulate demand but has refrained from broad interest rate cuts or other measures that would flood money into the financial system and risk increasing debt.
