Second largest economy: China’s economy grows robust despite the trade dispute

China’s economy grew robust in the second quarter. According to the Beijing Statistics Office, the gross domestic product (GDP) increased by 5.2 percent from April to June compared to the previous year. The plus remained just below the growth of 5.4 percent from the first quarter, making growth in 5.3 percent in the first half of the year. The government had specified a growth destination of “around five percent” for the year as a whole.

Economists evaluate the result as a sign of a strong resistance of the Chinese economy, especially since the trade conflict with the USA continues to smile. Both sides had initially increased their tariffs massively in the course of the escalating dispute, but then agreed on a three -month castle peace in May to enable further negotiations.

Consumption and exports contribute to growth

According to analysts, many retailers used the current time window and preferred exports, which accelerated growth. A stronger consumption, supported by state incentives, was therefore an important driving force.

However, according to the Beijinger economist Alex Hongcai Xu, this development should hardly be permanent: foreign trade has exceeded expectations. But that also means that the second half of the year becomes more difficult. The dynamics were anticipated, so to speak, and could not last permanently.

Many problems remain unresolved

Despite the solid total of the solid, many structural problems are also unsolved. “The real estate crisis remains a heavy burden for the households of the municipalities in the medium term,” warned economist Dan Wang from the Eurasia Group. At the same time, deflation risks and a slowly improper buying mood dampen the internal market.

In the future, China will feel external uncertainties and pressure in Germany, according to Sheng Laiyun, Vice Director of the Statistics Office. But in general China’s economy will protect stability. One could see that the good performance in the first half of the year laid a good basis for the year as a whole.

Price battles call government

Most recently, the Chinese government had also warned of the ongoing price struggles in key sectors such as electric cars, solar technology and batteries. State and party leader XI Jinping called for “disorderly” competition in a high-ranking meeting at the end of June.

However, observers see government policy as part of the problem: through massive subsidies and political targets, the production capacity in certain sectors has been greatly expanded – often faster than demand at home and abroad could grow. “The combination of too much offer and falling prices pressed the profits on a minimum and worsened the investment prospects,” said Economist Wang.

German companies come under pressure

The hard competition in the Chinese home market has produced numerous competitive companies that are also expanding internationally. The Chinese export industry has now overtaken Germany in many sectors. Only a few divisions such as car, medical technology and aviation are excluded.

However, according to an analysis of the Prognos Institute, Chinese companies now have a twice as high proportion of global exports as German companies in the balance. The institute puts the Chinese world market share at 16, the Germans to 8 percent. The forecast specialists expect tightened German-Chinese competition for global market shares in the coming years, since the United States is increasingly isolating from the rest of the world.

“China will try to sell its products more in other foreign markets, which exacerbates the competitive pressure there,” said Bertram Brossardt, the managing director of the Association of the Bavarian Economy in Munich, which had commissioned the investigation.