China’s economy and its problems in 2019

There are many fascinating facts about China. It has the largest population in the world. Moreover, there are only two countries with more than 1 billion citizens in China and India. However, it is only out of many interesting facts. Another one is that it is the third-largest country in terms of total area. For more than two decades, the local economy was growing faster than anywhere in the world.

In 70 years since the People’s Republic of China came to existence, it managed to become the second-biggest economy in the world. China transformed from agrarian society to global economic power.

The local economy became the main driving force of the world economic growth. The 2008 global financial crisis had a huge impact on the global economy. However, China’s economy continued its journey to the top. In this situation, someone may think that nothing can stop China’s economy from becoming even larger than it is today. This is not the case. Despite the achievement, China is facing many problems in economy, politics, and international affairs.

One of the main issues is the ongoing trade war between the U.S. and China. In 2017, even before becoming President Donald Trump was not happy with U.S.-China economic relations. After taking office Trump decided it was time to solve the problem. One of them was to tackle the issues caused by what he called unfair treatment of U.S.

The trade war started over a year ago. Nevertheless, it is very hard to predict when this dispute will end. Tariffs imposed on the U.S. as well as Chinese products had a negative impact on the global economy.

This problem underlines that China has to deal with various internal as well as external factors.

China’s economic problems

China’s economy is slowing down. This is a serious issue for the local economy. The Premier of China Li Keqiang made a comment which illustrates current reality. He said that it would be tough to sustain the 6% economic growth rate in 2019.  Nevertheless, he stated the official growth target for this is from 6% to 6.5%.

There is another problem, and that issue is the high debt levels. According to the analysts, one of the main contributing factors was that China’s government tried to solve this problem. Government’s plan was to reduce the reliance on debt when it comes to growth. After two years, it became apparent that it was not enough to eradicate this issue.

It was not the only idea connected to loans. Chinese authorities decided it was time to encourage the bank to provide loans to private companies. It is important to mention that in China state-owned banks prefer to lend to the state companies. This is an unusual situation as the private sector is the driving force of China’s economy.

The economic growth rate in the first quarter this year was 6.4%. However, in the second quarter, the growth rate decreased to 6.2% China will release the results of the third-quarter in Mid-October. This data will help to analyze the overall situation of the local economy.