The trade war is now beginning to have an adverse effect on the Chinese economy. China’s industrial production has reached a 17-year low. Not only this, the growth rate of investment in property has also been the lowest since December.
According to data from the National Bureau of Statistics of China, industrial production has increased by only 4.8 percent in July. Earlier in the month of June, industrial production grew by 6.3 percent. Trade war between China and America has been going on since last year, when America imposed heavy tariffs on many Chinese goods. Recently, in May, the US again increased the tariff on a large part of Chinese imports.
These figures show that domestic demand in China is also sluggish. According to the news agency Reuters, the decrease in factory production, softening of exports and lower than expected bank credit have forced the Chinese government to bring a relief package to give relief to the economy.
Significantly, in the second quarter of this year, the growth in the Chinese economy has also reached a 30-year low. China’s Industry Minister said in July that this year will have to work very hard to achieve the target of 6 percent of industrial production.
The growth rate of retail sales in China has also been disappointing. In July, steel production in China has been soft and retail sales have increased by only 7.6 percent, compared to 9.8 per cent growth in June. During January to July this year, China’s fixed asset investment has increased by 5.7 percent.
The fall in the growth rate of investment in property is a matter of concern, as it is the main driver of growth for the world’s second largest economy. Property investment has increased by 8.5 percent in July, while it has increased by 10.1 percent in June. Earlier, in December 2018, this rate was 8.2 percent.
The series of confrontation between China and the US began in July last year, when the US imposed new tariffs on Chinese products for the first time. After this, the Trump administration of America increased the tariff on goods worth billions of dollars imported from China from 10 percent to 25 percent in May this year.
In response, China also increased duty on import of US $ 110 billion worth of goods. America is China’s largest trade partner. The total trade of the US with China in the year 2017 was US $ 635.4 billion. Of this, exports from the US were $ 129.9 billion and imports from China stood at $ 505.5 billion.