Background on the Trade Dispute
In a recent development, analysts surveyed by AFP predict that China’s economy grew approximately 5.2% in the second quarter, despite the ongoing trade war initiated by Donald Trump. The world’s two largest economies imposed high mutual tariffs on each other in this quarter, but later agreed in May to temporarily lift them partially.
Impact on China’s Economy
The effects of this trade dispute on China’s economy will be revealed on Tuesday when the official statistical body releases GDP data for April to June. An AFP survey of various analysts suggests a 5.2% annual growth rate, although many experts consulted anticipate a slowdown in the second half of the year.
These forecasts are partly based on the increase in exports during the second quarter, likely due to preemptive purchases from abroad anticipating further trade disputes with Trump. However, Sarah Tan, an economist at Moody’s Analytics, told AFP that “ultimately, international trade cannot overshadow the drag of weak domestic demand.”
Shifting Growth Model
Many economists argue that China needs to transition from a growth model based on infrastructure investment, manufacturing, and exports to one centered around domestic consumption. Pekín has set a 5% GDP growth target for this year, identical to last year’s goal. The first quarter concluded with a 5.4% expansion, surpassing expectations.
Domestic Consumption Measures
To boost domestic consumption, Chinese authorities have implemented several measures over the past year. According to Sarah Tan, these initiatives have not addressed the underlying issues such as stagnant income growth, job insecurity, or economic vulnerability.
Key Questions and Answers
- What is the projected growth rate for China’s economy in Q2? Analysts surveyed by AFP predict around 5.2% annual growth.
- What factors are contributing to China’s economic growth despite the trade war? The increase in exports, possibly due to preemptive international purchases, is playing a role.
- How are China’s authorities addressing the economic challenges? They have set a 5% GDP growth target for this year and implemented measures to boost domestic consumption.
- What are the underlying issues that China’s economy is facing? Stagnant income growth, job insecurity, and economic vulnerability are some of the challenges.
