China's Economy Faces Headwinds In Second Half of 2018

Forex News

China faces great difficulties in achieving stable and healthy economic development. US-China trade tensions are intensifying, bringing increased risks for the Chinese economy in second half of 2018. China's economy is already starting to cool even before the trade fallout bites, with investment growth at a record low and consumers turning more cautious about spending. Beijing is speeding up infrastructure spending and offering help to smaller companies to prevent a sharper slowdown.

Despite the ongoing trade frictions with the US, China will ensure that its annual growth target will be met. China aims to expand its economy by around 6.5% this year. Gross domestic product grew 6.7% in the second quarter from a year earlier, slowing from the 6.8% pace in the first three months.

China’s policymakers have set a 10% growth target for retail sales for the full year, the same as in 2017, but that level has only been reached in one month so far this year. Sales growth in the last few months has been the softest since 2003.

China aims to continue its multi-year campaign to reduce financial risks and curb debt but will control the pace and intensity of such efforts, echoing a central bank pledge that the country won't resort to strong stimulus this time to prop up growth.