December 17, 2018

Chart of the Week: China economy faces downside risk at home and abroad

by Fathom Consulting.

Annual retail sales growth in China dropped to lows not seen since 2003 in November, raising further uncertainty about the prospects for the world’s second largest economy. Last year, the authorities implemented measures aimed at curbing the growth of credit. That policy tightening appears to have weighed on economic growth this year. Domestic concerns are being exacerbated by external ones. The Chinese economy could face further headwinds from US trade policy. As things stand, the Trump administration is scheduled to increase the tariff rate applied on around $200 billion worth of imports from 10% to 25% in March. Faced with downside risks at home and abroad, policymakers in Beijing have unveiled a wave of fresh stimulus measures this year. Whether that will be enough to avoid a sharp slowdown in economic growth remains to be seen.

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