China and the U.S. have remained relatively quiet after the two sides agreed to another temporary trade truce in Japan last month — until now, that is.
President Trump wasted no time this morning, jumping on Twitter to capitalize on the fact that China just posted its weakest economic performance in close to three decades and insisting it was proof the country is keen to do a deal.
In line with expectations, China’s gross domestic product growth came in at an annual rate of 6.2 percent in the second quarter of the year, according to the country’s statistics bureau. This was down from 6.4 percent in the first three months and the slowest pace of growth in 27 years when quarterly records began.
“The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving. This is why China wants to make a deal with the U.S., and wishes it had not broken the original deal in the first place,” he tweeted.
Trump was referring to early May when trade talks unexpectedly fell apart, with the U.S. accusing China of reneging on a number of commitments it had previously made.
That resulted in the U.S. increasing tariffs on $200 billion worth of goods from 15 to 25 percent, including handbags, and China retaliating with its own levies. Trump then also threatened to add duties to all remaining exports from China, totaling $300 billion and dragging fashion into the fray, unless China acquiesced.
The latter has now been put off indefinitely, though, since the U.S. and China agreed to restart trade negotiations at the G20 Summit in Osaka, Japan in late June, but some bystanders have warned that it’s likely they could be put back on the table in the next few months as neither side has indicated willingness to provide major concessions.
Not done with his one tweet, Trump also used the disappointing figures as evidence that it is China that is paying for the higher costs and the U.S. taxpayer is benefiting.
“In the meantime, we are receiving Billions of Dollars in Tariffs from China, with possibly much more to come. These Tariffs are paid for by China devaluing & pumping, not by the U.S. taxpayer!” he tweeted.
This contrasts with major companies’ repeated warnings that it will be them that have to pick up the tab, leaving them with little choice but to raise prices, which in turn would hurt American consumers.
For now, brands with an interest in China will be watching its economy for further signs of how much the trade dispute is impacting growth.
Beijing has implemented a number of strategies including tax and fee cuts in a bid to turn around its fortunes to little success, fueling beliefs that it will reach further into its bag of tricks in the coming months to spur on corporate and consumer spending.
But Julian Evans-Pritchard, senior U.S. economist at Capital Economics, isn’t optimistic: “Even with fiscal policy turning more supportive again, we think that construction activity will come under pressure in the coming quarters as the recent boom in property development unwinds,” he wrote in a note to clients.