Daily Management Review

Current GDP Growth Of Chinas Likely To Be Below 6 Percent, Says An Eocnomist


Current GDP Growth Of Chinas Likely To Be Below 6 Percent, Says An Eocnomist
It is likely that the economic growth for the Chinese economy in 2018 would come to below the 6 per cent level primarily because of a faltering domestic demand, according to a noted economist.
There are clear indications of weaker growth in recent times for the second largest economy of the world. Such signals include the lowering of the revenue and profit guidance the first quarter by the US tech giant Apple pinning the blame of the lowered guidance to a number of factors that include an anticipated drop in Chinese domestic demand for its new iPhones. ON Monday, flat sales for 2019 and the missing of its sales target for the entire of 2018 was announced by Hong Kong-listed automaker Geely.
"It's intriguing that the domestic demand part is the weak part — the external demand is not that bad," said Taimur Baig, chief economist at DBS Group Research. Signals of major structural changes in the Chinese economy were being delivered by the “particularly weak" domestic demand in the country, Baig said during a television interview.
Baig said that according to the forecast of DBS, the economic growth in China's GDP would be "sub-6 percent" currently.
In the third quarter last year, the economic growth of China was 6.5 per cent which was the weakest economic growth reported by the company since the global financial crisis. Despite the gloomy forecasts, the Chinese officials maintained that the growth target for 2018 to be at around 6.5 per cent.
Even though various reports have suggested that for much of last year, the Chinese economy had been able to hold up, most recent data also suggests a slowdown because of a perceived drop in the production metrics and export orders even while the country is engaged in the bitter trade war with its largest partner, the United States.
In addition to the trade tariffs imposed by the US, there are a number of domestic headwinds that are ailing the Chinese economy. China was already facing and trying to fend off a slowdown in its economy after decades of breakneck growth even before higher import tariffs were imposed on Chinese goods worth billions by the U.S. President Donald Trump, with counter tariffs being imposed by Beijing in retaliation.
It was very unlikely that a solution to the trade war could be found out and the trade war coming to an end within the next three to six months as the causes of discord between the two countries goes well beyond simple imports and exports, Baig said, even though the two trade representatives from the two countries are holding talks to resolve the trade impasses in Beijing.
"We will breathe a little sigh of relief if things don't get worse," he said.
A 90 day truce in the trade war agreed to by Trump and Chinese President Xi Jinping in Sao Paolo at the beginning during which time both the parties agreed to hold negotiations to on trade to try and iron out the differences. As a good gesture, the US postponed the imposition of increased tariffs from January 1, 2019 on Chinese goods worth $200 billion. 
"But beyond that, let's keep our expectations checked," he said.