China has shown strong growth in almost all sectors of its economy over the years but recently the country has witnessed a considerable drop in some of its promising departments of growth and development like infrastructure, etc. However despite expert predictions that things are slowly but surely going south for the country, the facts on the ground prove otherwise.
The indicators that point towards a slowdown
There have been several sectors that have witnessed a slowdown over the years and experts predict that these might contribute to a long term dive in the economy overall. Infrastructural investment grew by only 13% in the first quarter of 2018 which is almost 10% less than the amount it grew in the same period last year. The rising trade deficit of the country is seen as another major cause of concern as experts keep a close eye on negotiations with the US on steel tariffs and other issues related to bilateral trade.
Chinese imports swelled faster than their exports which resulted in a 20% decrease to their trade surplus which meant a dent of 0.6% to the overall GDP. Despite this, the United States still wants China to reduce its trade surplus with the country by $100 billion which could create more pressure on the local outlook.
However, the economy is still robust
Despite all these international distractions, China’s economy remains strong, so much so that even the government is acknowledging the fact by setting a GDP growth target of 6.5% for the rest of the year. This is keeping in view the fact that the economy grew by 6.8% in the first three months of the year 2018. This growth was witnessed in the wake of increased spending by consumers on movies and other entertainment related services. There was also a 35% increase in online retail sales which had a substantial impact on the gross domestic product of the country.
Chinese stock market and the respective predictions
The Asian markets in general and the Chinese Shanghai Composite Stock Exchange in particular have shown a mixed response ever since the possibility of a trade war with the US appeared on the horizon. Although experts have predicted that the Chinese market has much more potential to absorb shocks of a full blown war than the US, the stock still dipped 75 points in the closing week of May.
With a lack of catalysts that might spring growth in bourses, there is little clarity for future prospects but how things turn out on the global arena is yet to be seen. For now all we can do is watch the signs and keep our fingers crossed.
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