China’s economic growth has hit a new low

In 2019, the economy in China grew at the slowest rate for nearly 30 years. Not since 1990 has the Chinese economy grown by as little as 6.1%. Contributing factors to this have been weak demand domestically along with a trade stand-off with the USA.

Tensions abound

Tensions have been growing with the USA over a range of issues, not least the impact of the Huawei row and a stalemate over trade between Donald Trump and Chinese officials. With President Trump recently signing a new trade deal amidst confidence that American-Chinese relationships are thawing, data is showing renewed confidence in Chinese economic growth prospects.

Amidst the signing of the new ‘phase one’ trade deal, some analysts are cautious that the current optimism may end up being short lived.

One area in which analysts have cautious optimism is within manufacturing. Manfacturers producing items such as metal bonding adhesives like the are leading the charge to save the Chinese economy.

Stimulus from Beijing

With current growth at a recent low, the Chinese government has been exploring a range of different measures and strategies in order to boost growth over the past couple of years.

Following 2019’s final outcomes, Beijing is expected by many to implement a range of measures intended to improve the rate at which the economy grows.

Measures such as tax breaks and greater powers for local governments within China to sell bonds in order to fund infrastructure projects have helped mitigate against the low growth, but not sufficiently so far to bring the economy to the heights hoped for.

Lending has been encouraged, with banks providing incentives in the shape of small business loans. Bank lending reached an all time high in 2019, with almost £2 trillion in new loans being arranged in China.

In spite of these measures, growth has remained slow, and investment growth has in turn fallen to levels previously unseen.

Not all doom and gloom

Whilst China’s economic growth in 2019 has been poor by its own standards, it is still outstripping many other leading economies. China’s growth in the first part of the 21st century was typically over 10%. Although, whilst China’s economy grew by just over 6% in 2019, the US economy is forecast to have only managed 2.2% growth in this period.

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