China economic slowdown sparks debate over what caused the slump, and how Beijing should intervene

How much of China’s economic slowdown is the fault of the US trade war is a topic of discussion, with many analysts pointing to structural issues in Chinese economy

Economists also argue over the level of government intervention required to stimulate an economy that is growing at its slowest rate in decades

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An employee working on a medical glove production line at a factory in Huaibei in China's eastern Anhui province. Photo: AFP

Published: 7:29pm, 16 Sep 2019Updated: 10:33pm, 16 Sep 2019

After China’s economic slowdown grew more pronounced in August, analysts continued to debate how much of the blame rests with the trade war and how much is down to older, underlying issues in the Chinese economy.

Industrial production growth - an important gauge of manufacturing output - slowed to 4.4 per cent in August, a new 17-year low, while retail sales growth slowed to 7.5 per cent. Fixed asset investment slowed to 5.5 per cent in the first eight months of year, down from 5.7 per cent in the first seven months, despite government efforts to boost local government infrastructure investment.

While the trade war has been commonly blamed for a slowdown which also saw China’s economy grow at its lowest rate on record in the second quarter of this year, others have pointed to challenges to growth that predate last July, when the first tariffs were enacted, such as the deleveraging campaign that started two years ago to reduce debt and risky lending.

Zhou Hao, senior economist at Commerzbank, suggested that while each of Monday’s figures from the National Bureau of Statistics were worse than expected, they may not come as a surprise to policymakers in Beijing, who have already baked the slowdown into the country’s economic strategy.

“The economic figures would not be that good even without the trade war. The slowdown was already projected,” Hao said. “Instead, policymakers are using the occasion to accelerate long-awaited but delayed reforms, such as interest rate liberalisation.”