Business
19:39, 06-Jul-2018
China's economic fundamentals remain solid amid trade rows with US
Updated
18:46, 09-Jul-2018
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The markets have been on edge throughout June in anticipation of heightened trade tensions between China and the US. But analysts in Beijing say the markets are overreacting as China's economic fundamentals remain solid.
A raft of official data points to a resilient economic picture. From electricity usage to the volume of freight shipped, the numbers show only a mild impact from what was then the threat of tariffs on 50 billion US dollars worth of Chinese goods.
Figures show that the country’s electricity usage increased ten percent year-on-year in the first five months of 2018. That's up 3.4 percentage points on an annual basis.
VCG Photo
VCG Photo
The industrial sector consumed eight percent more electricity in the same period, the biggest jump since 2013.
Meanwhile, industrial value-add for the first five months grew seven percent on the year, up a fifth of a percentage point. Officials said that is a sign that China has truly moved up the value chain of advanced manufacturing.
And volume of freight, which is a key gauge for business and trade, surged seven percent in the same period, faster than its first-quarter growth.
Dong Ximiao, a senior researcher at Evergrowing Bank, said that China’s cut in reserve requirement ratio and the loosened credit environment would boost the industrial sector. Dong noted that more local government debt issuance would support infrastructure as well.
VCG Photo
VCG Photo
Besides, major impacts are not expected from the US tariffs on China's currency and capital market.
Ma Jun, a member of the People's Bank of China (PBOC) policy committee, said that the bulk of the initial shock from the escalating trade tensions between China and the US is digested by the market.
With regards to depreciation of the yuan, Liu Zhiqin from Chaoyang Institute for Financial Studies at Renmin University of China told CGTN that China had actually prepared to deal with the fluctuations.
“It has been six months, the markets are ready to deal with the risks,” said Liu.