China Pulls Out Its Arsenal, Trade Spat Hurts Growth

China

The Chinese economy has shown signs of moderation amid its trade spat with the US. Some of the recent economic data points from China missed consensus estimates. For instance, China’s (FXI) July fixed-asset investment, retail sales, and industrial production data were lower than expected. While markets might not be too perturbed about falling fixed-asset investment growth rates, lower retail sales growth is a concern. China’s car sales (TSLA) also fell on a yearly basis in July.

China Pulls Out Its Arsenal, Trade Spat Hurts Growth

PMI

China’s official August PMI (purchasing managers’ index) was 51.3—slightly higher compared to July and higher than analysts’ estimates. However, the survey showed weak export orders. According to Reuters, “Export orders shrank for a third straight month, a business survey showed, suggesting a flurry of punitive U.S. trade actions is starting to bite even as Washington readies more sweeping measures.”

China is taking measures as the trade spat with the US starts to impact the country’s economic activity. The country is shoring up its infrastructure investments—something it has resorted to in the past. China announced tax cuts to boost domestic consumption. Tax cuts in the United States (SPY) have been among the reasons behind the country’s strong economic growth.

President Trump’s steel and aluminum tariffs are leading to protectionist policies in other countries, which we’ll discuss in the next part.