China’s economic growth slowed down to a 27-year low during the second quarter of 2019, as trade war tensions with the US escalated.
Gross domestic product (GDP) in the country climbed 6.2 per cent in the three months to the end of June, falling from 6.4 per cent in the first quarter and marking the lowest quarterly rate of growth since records began in 1992.
According to China’s National Bureau of Statistics, the country is also likely to face continued “downward pressure” going into the second half of this year.
Despite the headline growth figure dropping, retail sales jumped from 8.6 per cent to 9.8 per cent, while industrial production rebounded from five per cent to 6.3 per cent.
The fixed asset investment reading also narrowly trumped expectations.
This morning the Dax and Cac have opened up 0.73 per cent and 0.21 per cent respectively at the time of publication, while the FTSE 100 has edged down 0.09 per cent to around 7,488 points.
“The combination of better than expected data on the undercard, and the idea that the Chinese government could escalate their stimulus plans in order to keep growth the right side of six per cent, meant the European indices opened in the green,” said Connor Campbell, a financial analyst at Spreadex.
“Market sentiment has been boosted by very strong economic data (GDP, retail sales and industrial output) out of China overnight which beat all estimates, and investors welcomed signs that the economy is stabilising,” added Pierre Veyret, technical analyst at ActivTrades.
Despite a recent truce in the tariff disputes between Trump and his Chinese counterpart Xi Jinping, the latest figures underline the impact that the standoff between the two sides has had on investment and trade.
Last week China’s customs department reported that dollar-denominated exports tumbled 1.3 per cent in June when compared with the same month in the previous year, while imports slumped 7.3 per cent.
“Exports declined last month as a result of the step-up in U.S. tariffs in May and waning global demand,” noted Julian Evans-Pritchard, senior China economist at Capital Economics.
He added: “Imports also weakened on the back of a renewed domestic slowdown.”
Main image: Getty