Friday 14 June 2019 12:04 pm

China industrial output growth eases to 17-year low as US trade tensions mount

China’s industrial output growth plunged to a more than 17-year low in May as the world’s second biggest economy continued to be hit by trade tensions with the US.

Industrial production grew by five per cent in May compared to a year earlier, below forecasts and the weakest growth since the beginning of 2002.

Read more: IMF head says US-China trade war biggest threat to global growth

Tensions between the US and China have escalated in recent weeks with President Trump mulling whether to extend tariffs on Chinese imports.

Trump and Xi Jinping could be set for a meeting at the G20 summit later this month, after which the US President is expected to make a decision on tariffs.

The weak Chinese data further demonstrated the impact the trade war is having on growth.

Fixed asset investment also grew less than expected, increasing 5.6 per cent in January to May below market consensus of a 6.1 per cent rise.

Vice premier Liu He hinted at further stimulus earlier this week as he urged regulators to boost the economy and said Beijing had plenty of policy tools at its disposal.

Read more: G20 statement swerves call to end US-China trade war

“Declining fixed asset investment and industrial production out of China this morning highlights the continued weakness that will continue to drag growth lower,” Joshua Mahony, chief market analyst at IG said.

“While it may seem that there is no end in sight for this US-China spat, the G20 meeting between Trump and Xi Jinping could be the spark the reignites the trade negotiations once again,” he added.