Home Market News Forex Chinese Growth Looks To Be Going Down In Q1 2018

Chinese Growth Looks To Be Going Down In Q1 2018

21
0

China is the second largest economy in the world and it is also a third top destination when it comes to foreign investments. This is after the UK and the US, but there is going to be a huge growth for GDP in the first quarter. Readings on industrial production and even retail sales are also going to be released as well. The economy has transformed from an agriculturally based country into a huge manufacturing exporter. This is said to be going down for the first couple of months and this is so that financial risks and even pollution can be mitigated. This also weighs a lot on the business sentiment, and even though trade risks have only just come on board, it’s safe to say that China’s outlook on the economic performance scale is looking bleak.

A lot of analysts have stated that GDP growth has gone down by 0.1% and this is in the first quarter. It has expanded by 6.7% and then 1.5% in the first quarter. The technology sector really is one of the fastest growing sectors and this is especially the case when you look at China. It has engaged in infrastructure spending for quite some time now and this is said to improve the country from selling cheap goods to selling very high-end products.

The problem here is that the leverage resulted in a very large debt hangover, and that China’s own debt to GDP ratio is now at 257% which is an all-time peak. This pushed a lot of authorities to try and take more restrictive measures when it comes to credit. Even though financial risk is present, the president is said to look into more environmentally friendly resources. The spike in trade tensions with the US were not good at all and this is especially the case after Trump threatened to put a huge tariff on Chinese technology, medicine and even transportation products.

Trade risks are receding with the latest news showing that China and even the US are now more inclined to start their own trade negotiations. They are doing this to try and continue the tariff game. Friday’s data on the Chinese exports showed that they have declined by over 2.7% and this is the first time this has happened all year. The seasonal effects around the Lunar year holiday are still happening but there could also be a risk from exports trying to front-load their sales far earlier than they should be doing because of the everlasting trade war.

When you look at the Forex market, you’ll find that there is a very upbeat GDP growth and this could really provide some support to the Yuan. The AU dollar could also bounce way higher as well and the main reason for this is because it is China’s main exporting partner. This could push it past the 200-day moving average as this is standing at 0.7814 at the moment. A negative surprise could also erase the gains that were made in the past week however, and this could drive it all the way down to 0.7700. The March low was 0.7640 and this could come out of the woodwork if the growth for GDP falls below the target set by the PBOC. The target is currently 6.5%.

Chinese industrial and retail sales will certainly be in the spotlight as the trending activities continue to show consumer spending. Expectations are also really high and it also helps to carry the whole thing moving forward. Whether it will work out this way, only time will tell.

LEAVE A REPLY

Please enter your comment!
Please enter your name here