Page 25 - ARUBA TODAY

BUSINESS Tuesday 4 sepTember 2018
A25

Tariff fight adds to China's economic challenges

By JOE McDONALD ever, intended to address
Associated Press American complaints at
BEIJING (AP) — China fac- the center of the trade
es bigger economic chal- war. Those hinge on U.S.
lenges than its trade war objections to Chinese plans
with the U.S. for state-led creation of
Even before tit-for-tat tariffs, global champions in robot-
growth in the world's No. ics, electric cars and other
2 economy was already technologies. American
forecast to cool from 6.8 officials complain those
percent last year to a still- violate Beijing's market-
robust 6.5 percent this year. opening commitments and
Communist leaders who might erode U.S. industrial
are trying to engineer leadership.
slower, more self-sustaining Instead, China is trying to
growth clamped down last reduce reliance on foreign
year on a bank lending markets and technology
boom that encouraged by promoting domestic
businesses and families to consumption and industry
borrow and spend beyond development.
their means. But it is a tricky ___
balance to strike and com- TUMBLING STOCKS
munist leaders worry the While Wall Street sets re-
economy is weakening too In this March 23, 2018, file photo, a shopper wearing a mask against pollution walks past a U.S, cords, China's stock market
much. apparel store in Beijing. is 2018's worst global per-
Growth in retail sales, a Associated Press former.
bigger part of the Chinese The market benchmark
economy than exports, May's 6.8 percent. Invest- 6 percent to hit their target ductive. tumbled 25 percent from
was weaker than expect in ment in factories and oth- of doubling incomes from Banks have been told to its January peak to mid-Au-
July and close to a 14-year er fixed assets rose at the 2010 levels by 2020. lend more freely to small gust. It has gained 3.7 per-
low. Factory output and slowest rate in 19 years. China's yuan has sunk in exporters that might be cent since then after gov-
other sectors also deceler- Retail spending and corpo- value against the dollar. hurt by Trump's tariffs. That ernment spending plans
ated. Beijing responded by rate profits weakened. That helps exporters by temporarily backtracks on helped to revive investor
easing lending and boost- With less demand from making Chinese toys, ap- government efforts to rein confidence.
ing government spending. Chinse steel mills, global pliances and other goods in rising debt. The biggest decliners are
"We expect the economy prices for iron ore are off cheaper for American con- Beijing sees the "growth real estate, construction
to get worse before it gets 14 percent this year — and sumers. But regulators worry slowdown as a bigger near- and other companies
better," said Nomura econ- down 60 percent from their it will trigger an outflow of term risk," said UBS econo- hardest-hit by Beijing's lend-
omists in a report. 2010 peak. That cuts reve- money, making it harder for mists in a report. ing controls.
Trump's advisers say the nue for Australia and other companies to borrow. The government is pumping Shares in Poly Real Estate
slowdown gives Washing- producers. ___ money into the economy Group, one of China's big-
ton leverage in the trade Chinese leaders want to CHINA'S RESPONSE with plans to spend more gest developers, have lost
battle. shift emphasis from the Regulators eased credit on building roads, bridges 40 percent of their value
"Their economy looks ter- headline growth number to controls, promised more and other public works. this year. Aluminum Corp.
rible," said Trump's top eco- poverty reduction, energy spending on public works This month, sales of infra- of China Ltd., the country's
nomic adviser, Larry Kud- efficiency and the envi- and announced policy structure bonds raised 280 biggest aluminum produc-
low, at a Cabinet meeting ronment. But they need to changes aimed at making billion yuan ($41 billion), er, is down by half.
this month. keep the expansion above Chinese industry more pro- more than the total for the The biggest gainers are
But analysts closer to China first seven months of the smaller tech companies
say it is doing better than year, according to Mac- that look set to benefit
Americans might think. quarie Bank's Larry Hu. from official industry plans.
"A lot of this economic Beijing has speeded up the Shares in Zhongshi Technol-
slowdown is really the result rollout of plans to ease re- ogy Ltd., a Beijing-based
of an intended policy," said strictions on foreign owner- maker of insulators for tele-
Tai Hui of J.P. Morgan As- ship in auto manufacturing, coms, medical and auto-
set Management in Hong banking and insurance. motive equipment, are up
Kong. "The overall growth The moves are not, how- 400 percent this year.q
momentum is still relative-
ly healthy and certainly
broadly in line with the au-
thorities' plans."
Here is a breakdown of Chi-
na's economic strengths
and weaknesses:
___
ECONOMIC SLOWDOWN
July's downturn was more
abrupt than policymakers
wanted.
Growth in factory output
slowed to 6 percent from