China Warns of Global Recession

Sharing is Caring!

via scmp:

  • US investment in China grew 7.5 per cent between January and May, year on year, a much slower pace than the 24.3 per cent recorded between January and April
  • Mofcom spokesperson Gao Deng told a press conference in Beijing that the trade war ‘could cause a recession in the United States and global economies’
May’s escalation in trade tensions led to a sharp drop off in the growth of American investment in China, according to data released on Thursday, which highlighted the

chilling effect

the trade war is having on investor confidence.

The data release from the Chinese Ministry of Commerce (Mofcom) showed that US investment in China grew 7.5 per cent between January and May, year on year, a much slower pace than the 24.3 per cent recorded between January and April and also significantly lower than the 16.3 per cent growth in investment over the first five months of 2018.

The US fell to the sixth largest foreign investor in China in April from third place March, according to the data, but there was no figure available for US investment in China in the month of May.

Mofcom spokesperson Gao Deng telling a press conference in Beijing on Thursday: “There will be no winner in the trade war, which could cause a recession in the United States and global economies.”

The ministry did not disclose US investment growth in China for the month of May alone, but the plunge seems to have coincided with the

collapse of trade talks

between Beijing and Washington. This led to the US more than doubling tariffs on US$200 billion of Chinese goods, from 10 per cent to 25 per cent. Washington also set the ball rolling on new tariffs on a further 25 per cent tariff on the remaining Chinese imports to the country, valued by the US government at US$300 billion. China retaliated by slapping higher tariffs on US$60 billion of US goods.

The trade war has led

US exports to China

to fall by 29.6 per cent in dollar terms between January and May from a year earlier.

China’s overall foreign direct investment (FDI) growth accelerated slightly to US$54.61 billion over the first five months of this year, a rise of 3.7 per cent from the same period last year. This was slower than the 3.5 per cent overall growth in the January to April period.

In the single month of May, total FDI into China grew by 4.6 per cent to US$9.47 billion, a larger rise than the 2.8 per cent increase posted in April. Investment in China’s hi-tech service sector, meanwhile, saw the most significant growth over the first five months of this year, with foreign capital inflows surging 68.9 per cent, according to the ministry data.

In contrast inbound FDI, China’s outbound direct investment (ODI) decreased by 1 per cent to US$44.54 billion in the January to May period. China saw no new ODI in fields of property or sports and entertainment in the year-to-date, as these were areas put on a list of banned overseas investments by the government, as a means of preventing capital flight.

478 views

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.