The economic news out of China isn’t great.
Now that the numbers are in and we know that the Chinese boom is slowing down, what will happen to China and all the businesses that have been affected by the trade war?
China has posted its growth rates, and the economy has grown at the slowest rate since 1992 amid the trade war. The Chinese economy grew 6.2% during the second quarter, another drop from the 6.4% for the first quarter. This comes after a 2018 which saw the Chinese economy grow by 6.6%. While there are several reasons for this, there is no doubt in anyone’s mind that the US-China trade war is playing a major role. The US-China trade war started at a time during which the Chinese economy was already slowing down. It would now appear that the compacted effects of both China’s natural economic slowdown and the trade war are wearing China down at a time when a trade deal doesn’t appear immediately likely.
When it comes to the beneficiaries of the current trade war, neighboring emerging economies will likely benefit the most. “I think in large part because of the tariffs, and companies that are pulling out. I mean, if you can make things cheaper outside of China, perhaps in Vietnam, wait and avoid the tariff. I think that’s very smart. I think that a lot of other companies think it’s just going to get worse and that the president is going to put the tariffs on the last $300 billion. China is in no way the cheapest place to make things,” said Jim Cramer during an interview. The fact of the matter is that doing business in China has become increasingly difficult given the situation.
Most of the damage to the Chinese economy has come from the export sector taking a hit. By the end of the year, China’s GDP growth rate will likely balance out at around 6.3%, according to Business Insider’s sources.
