Date published

MERICS Economic Indicators Q2/2018

Credit tightening and trade conflict threaten growth

By Max J. Zenglein and Maximilian Kärnfelt

After nearly a year of regulatory policy tightening, the Chinese government's attempts to fight excessive debt and push for better environmental protection are beginning to affect the real economy. The current economic slowdown - with GDP growth falling to 6.7% - does not yet reflect the consequences of an escalating trade war with the United States, but could be accelerated by it. To strengthen China's international competitiveness and create an environment that is responsive to market needs and provides spaces for experimentation, the authorities have announced new measures: local authorities in Shenzhen released a document stating that a Free Trade Port (FTP) would be implemented by 2020. Similar plans have been issued by the State Council for Hainan in April. Free Trade Ports are to be established on the island province by 2025. The latest edition of the MERICS Economic Indicators finds reason to be skeptical about the success of those plans.

The MERICS Economic Indicators are published on a quarterly basis and trace the multiple data sets that shape China’s development in key areas, among them growth figures, investment flows, industrial output, financial markets and consumer sentiment.