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China’s economy is slowing down, with GDP growth at 6.5% in third quarter. That’s the lowest rate since 2009. The question for Chinese policy makers is whether or not they can restore market confidence in the face of a trade war with the United States. Lingling Wei reports in The Wall Street Journal:
Restoring market confidence is proving to be one of the toughest economic challenges for China’s leadership. Soon after the financial mandarins’ remarks were released, the official Xinhua News Agency published an interview with Vice Premier Liu He, President Xi Jinping’s economic captain, in which he said the overall economic situation remained stable. Mr. Liu sought to dispel worries about the impact of the simmering trade conflict with the U.S. on China.
“Frankly, the psychological impact is bigger than the actual impact,” he said. “Right now, China and the U.S. are in contact.”
Washington and Beijing are preparing for a meeting between President Trump and Mr. Xi at the Group of 20 leaders’ meeting in Buenos Aires in late November.
The 6.5% quarterly growth is the lowest since the first quarter of 2009 and is mixed news for Chinese leaders as they brace for a prolonged trade conflict with Washington. While the economy remains on track to meet Beijing’s full-year growth target of about 6.5%, the third-quarter performance showed more signs of weakness—a scaleback of industrial production, slowing retail sales, anemic big-ticket investments and rising corporate defaults. That could limit Beijing’s room to maneuver when negotiating with the U.S., whose economy is growing robustly.
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