Trade War & Slowdown in China

CD Equisearch Pvt Ltd | Jan. 30, 2019, 12:33 p.m.

The world economy is set to feel the pains of the trade war in 2019. The lasting damage caused by President Trump’s fight with China may be far more than meets the eye. China is experiencing a slowdown in industrial production. According to Trading Economics, China’s industrial production is projected to decline to 5.20 percent by 2020. In response to slow growth, China’s Central Bank has eased monetary policy by reducing the cash reserve ratio requirements by 100 bps on Jan 4. Qian Wang, Managing Director and Chief Economist, Vanguard Investment Strategy Group (Asia-Pacific) said "This round of economic decline to a large degree is due to, a downturn in individual and private sector confidence. In this situation, we are concerned that stimulative economic policy may be slowly losing its effectiveness, and may not work as quickly." Hence, the main priority for China in the short term will be to restore confidence of the private sector.

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