Market Commentary

China Slowdown

gap graph

China has suffered through a bear market in stocks all year, and now within the last few months, their factories are showing the slowdown stock prices predicted. The Chinese government in conjunction with a major business magazine conducted a survey of Chinese factories and it clearly showed domestic demand slowing. That means internally China’s consumers are tightening. This does not suggest China won’t continue to grow but the growth rate that is near 6% today may go to 5% in 2019.

In turn, this slowdown will affect all the Asian economies that supply China with raw materials to keep their economy running smoothly. In China export growth has actually held up well but much of that was an effort to avoid possible future tariffs by the United States. Even if a trade deal comes to fruition exports from China will slow as future demand has already been met by bringing the buying forward.

It is not a good start for Asian economies for the New Year.

Leave a Reply

Your email address will not be published. Required fields are marked *