By Jon Dougherty
(NationalSentinel) Amid a rash of news reports Wednesday claiming the U.S. is headed for a recession, thanks in large part to President Donald Trump’s tariff-centric trade policies, comes a little-noticed report indicating that China, our main economic competitor, isn’t doing so well after all.
While most of the media ignored it, The Wall Street Journal reported on a raft of bad economic news for China that likely explains why Beijing was so quick to end its currency manipulation a week ago after the president warned of further trade consequences.
Specifically, the WSJ noted that unemployment in China has spiked amid slowdowns in the country’s manufacturing sector and decreased consumer activity, all of which threaten the Asian giant’s 6-6.5 percent annual growth rate target:
China reported a raft of weak economic data, adding to evidence that the world’s second-largest economy is slowing further as it remains locked in a trade war with the U.S.
The jobless rate in Chinese cities returned in July to its highest level since regular reporting on the data began, as employers turned cautious. Other key economic readings for the month, including factory production, consumption and property investment, came in much lower than expected.
While China earlier reported a surprise jump in exports in July, economists say the more-than-yearlong trade conflict with the U.S. has dented market confidence, forcing manufacturers to scale back production and investment, and prompting consumers to tighten purse strings.
“The cooling of economic activity last month was even worse than that of 2008 when industrial production was hit by the global financial crisis, while domestic consumption remained strong,” noted Zhaopeng Xing, an economist with ANZ.
He added that because of the economic downturn, the Chinese Communist Party would have to implement stimulus policies this year in order to reach the desired GDP growth rate.
“Today’s data demonstrated that the Chinese economy faces increased downward pressure that hasn’t been alleviated by the previous stimulus policies,” Shuang Ding, an economist with Standard Chartered, told the paper.
So far, the Chinese government has attempted to spur growth by cutting taxes and fees, but analysts said that hasn’t helped much. Further measures, including a cut in the interest rate the central bank charges to lend to other banks, will probably be needed.
Unemployment in China’s urban centers is far higher than it is in the United States, and it is rising: 5.3 percent, compared to the national unemployment rate in the U.S. under the Trump administration’s economic policies of 3.7 percent, a level most economists believe represents full employment.
China’s manufacturing sector alone, the WSJ noted, has shed more than 5 million jobs this year, with anywhere from 1.8-1.9 million of them – nearly 40 percent — due to the ongoing trade war with the U.S.
So, while China is shedding jobs in its manufacturing sector as a result of the trade war, the United States’ manufacturing sector has been adding jobs: 314,000 new manufacturing jobs since the president took office, or 170 percent more than his predecessor, President Obama, according to Forbes.
While both countries continue tit-for-tat tariffs and other trade sanctions, American news outlets hare repeatedly claimed that the United States and its workers are suffering more than the Chinese, but that’s false, judging by this new economic data out of Beijing.
What’s more, the declining economic output for China will put far more pressure on President Xi Jinping ahead of the 70th anniversary celebration of the founding of the People’s Republic of China on October 1, to show that he’s a strong leader and that the country is on the right path.
The pro-democracy protests in Hong Kong aren’t helping (Xi) either.
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