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ECONOMY: Moderate but slower growth
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Moderate but slower growth

温和但缓慢的增长
By Morgan Brady

BT 201909 ECONOMY 11

As usual, a recent tweet by the US president, Donald Trump, caused turbulence in the markets. He announced further tariffs on Chinese goods worth $300 billion. As a result, equities tumbled, bonds in many countries produced negative yields, and capital flowed heavily to safe haven assets, such as gold, which reached the price $1500 per ounce. The USDCNY exchange rate went above the psychological mark of 7 CNY per USD. Following that, Trump tweeted again accusing China of devaluing its currency, and labelled it as a currency manipulator. Then, the US announced that it would delay the date of imposing the tariffs on some of the Chinese goods meant for consumption, from September till December. This was to protect US consumers from extra costs during the holidays. Globally, there are concerns about growth due to the trade war. In China, the numbers are still not alarming.

BT 201909 ECONOMY 02同以往一样美国总统唐纳德特朗普最近发布的一条推文引发了市场的动荡。他宣布对价值3000亿美元的中国商品征收进一步关税。结果股市暴跌,许多国家的债券产生负收益率,资金大量涌入避险资产,如黄金,价格达到每盎司1500美元。美元兑人民币汇率突破1美元兑7元人民币的心理关口。此后,特朗普再次发推文指责中国贬值货币,并称其为汇率操纵国。然后,美国宣布将从9月到12月推迟对一些中国消费品征收关税。这是为了保护美国消费者。在全球范围内,人们担心贸易战影响经济增长。但在中国,这些数字仍然乐观。

Trade balance

BT 201909 ECONOMY 03China’s trade balance showed positive results in July. The US-dollar denominated exports increased by 3.3% in July from the same a year ago. Imports, on the other hand, decreased by 5.6% over a period of one year. Customs data showed that the trade surplus was $45.06 billion. With the US, China’s trade surplus stood at $27.97 billion in July, lower than the previous month’s $29.92 billion. In the first seven months of 2019, China’s trade surplus with the U.S. has totalled $168.5 billion.
 

Many analysts believe that the upbeat trade numbers are a result of sellers expediting their shipments before the tariffs are due in September. Yet, the weaker Yuan likely helps in offsetting the effects of the tariffs.
 

However, while a weaker Yuan may actually make Chinese exports more competitive, it will also hurt imports by increasing their prices. This would increase costs for businesses, whose inputs are imported from outside. Therefore, it may not be in the best interest of China to let its currency slip down too far. On the other hand, it is also costly to strengthen the Yuan, as it would deplete foreign reserves.
 

China retaliated to Trump’s new announced Tariffs by confirming that it would suspend the purchase of agricultural produce from the US, which were included in an earlier trade truce between the two countries.

BT 201909 ECONOMY Tonghai Port Area in Nantong Jiangsu provinceTonghai Port Area in Nantong, Jiangsu province

贸易平衡

中国的贸易平衡在7月份取得了积极成果。与去年同期相比,7月份以美元计价的出口增长了3.3%。另一方面,进口在一年内下降了5.6%。海关数据显示贸易顺差为450.6亿美元。与美国相比,7月份中国的贸易顺差为279.7亿美元,低于上个月的299.2亿美元。
 

许多分析师认为,乐观的贸易数据是卖家在9月份关税到期之前加快出货量的结果。然而,较弱的人民币可能有助于抵消关税的影响。
 

然而,虽然较弱的人民币可能实际上使中国出口产品更具竞争力,但也会通过提高价格来损害进口。这会增加企业的成本,企业的投入是从外部进口的。
 

Inflation numbers

Food prices jumped by a staggering increase of 9.1% over a period of one year, ending in July, 2019. The main culprit has been the increase in the prices of pork, as a result of the spread of African Swine Fever (ASF). Pork prices spiked by 27% from a year ago in July, while fresh fruit prices rose 39.1%, according to the data. Fruit was affected by harsh weather conditions. The increase in the prices of non-food data was merely 1.3%.

BT 201909 ECONOMY 05通货膨胀

截至2019年7月,食品价格急剧上涨了9.1%。由于非洲猪瘟的蔓延,猪肉价格上涨。数据显示,7月份猪肉价格较去年同期飙升27%,水果受恶劣天气条件的影响,新鲜水果价格上涨39.1%。非食品数据价格的上涨仅为1.3%。
 

Retail sales and fixed-asset investments

Customers use self service checkout machines at Alibabas Hema Fresh supermarket in ShanghaiCustomers use self-service checkout machines at Alibaba's Hema Fresh supermarket in Shanghai

The retail sales and value-added industrial output grew at their slowest pace in nearly a decade, if not more. Retail sales grew at a rate of 10.6%. They have been achieving slower growth since around 2011. Industrial output growth was at 4.8%, which is also the slowest growth rate since 2010. This indicates that Chinese consumers have been having a gradually faltering appetite to spending money. It also shows that the producers are not growing as fast as they did 8 or 9 years ago.
 

Retail sales index, which covers expenditure by Chinese consumers, the government and businesses, showed a growth of 7.6% year-on-year in July, much lower than the rate of 9.8% achieved in the month before.

BT 201909 ECONOMY 06零售和工业产出

零售和增值工业产出近十年来增长速度最慢,自2011年左右以来,它们出现了较慢的增长。工业产出增长率为4.8%,这也是自2010年以来最低的增长率。这表明中国消费者对消费的兴趣逐渐萎靡。
 

Fixed asset investments

BT 201909 ECONOMY 07Fixed assets investments, which boost domestic demand, increased 5.7% from January till July this year. This is lower than the 5.8% growth in the first six months, which means that the investments have fallen back slightly in July.
 

Government infrastructure investments increased by 3.8% in the first seven months of the year, compared to 4.1% in the first six months. This shows also a decline in July. Property investments had a similar performance as they grew by 10.6% in the first seven months of the year, compared to nearly 11% growth in the first two quarters.

BT 201909 ECONOMY 08固定资产投资

从1月到7月,固定资产投资增加了5.7%。这低于前六个月5.8%的增长率,这意味着7月份的投资略有回落。
 

今年截至七月,政府基础设施投资增长了3.8%,而前六个月为4.1%。这也表明7月份出现下滑。
 

Conclusion

BT 201909 ECONOMY 09The trade war between the US and China is a global issue. This is because it concerns the largest two economies in the world measured by output. That is, it impacts the very engines of global economic growth. As a result of the declining sentiment, the IMF lowered its growth forecasts for the global economy to 3.2% in 2019. The effects are felt through investors’ deteriorating sentiment and actual slower growth. This is because those concerns are coupled with tensions surrounding a hard Brexit. The United States will likely push until it reaches a deal, despite its current uncompromising behaviour, but until then, we will likely witness more turmoil. Slower growth will probably continue in China, until matters are close to being resolved.

BT 201909 ECONOMY 10美中之间的贸易战是一个全球性问题。这是因为它涉及世界上最大的两个经济体。也就是说,它会影响全球经济的引擎。由于市场情绪下降,国际货币基金组织在2019年将对全球经济的增长预测下调至3.2%。这种影响可能从投资者情绪恶化和实际增长放缓中体现。我们可能会看到更多的动荡。在问题接近解决之前,中国可能会继续放缓增长。

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