China factory growth slows in June as trade tensions rise

“Domestic demand will be weakening in addition to external demand faces pressure via escalating trade frictions between China in addition to the United States,” said Wen Bin, senior economist at Minsheng Bank in Beijing.

Wen said he expected the central bank to continue to lower banks’ reserve requirement ratios (RRR) inside coming months to help ward off a sharper economic slowdown.

The central bank said on June 24 of which could cut the RRR by 50 basis points for some banks to accelerate the pace of debt-for-equity swaps in addition to spur lending to smaller firms.

After May’s official factory PMI touched an eight-month high, there have been increasing signs of which China’s economy will be finally slowing.

Credit growth has slowed This specific year as the government cracks down on many types of lending, in addition to the tighter liquidity environment appears to be impacting growth.

On July 16, the government will be due to Discharge data on second-quarter growth in gross domestic product (GDP) in addition to different key indicators.

Analysts at ANZ forecast second-quarter growth of 6.7 percent, via 6.8 percent inside first quarter.

In May, industrial output, retail sales in addition to fixed asset investment all missed expectations as auto sales dropped, in addition to local governments scaled back building projects amid scrutiny via Beijing over their borrowings.

While the economy could likely handle these domestic challenges without growth slowing dramatically, the trade dispute with the U.S. will be adding to uncertainty about how China’s economy will react.

As U.S. President Donald Trump has ratcheted up the pressure on China with threats of completely new tariffs in addition to investment restrictions, China’s stock markets in addition to currency suffered one of their worst months in years in June.

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