China's growth at its lowest level in nine years: – I think the situation is worsening

Economic growth in China has fallen to its lowest level since 2009. On Friday morning, the figures showed that the annual growth measured in gross national product (GDP) was 6.5% in the third quarter.

Several economists say that the trade war has begun to hit the Chinese economy, but Olav Chen, Storebrand's portfolio manager and responsible for global allocation and interest rates, believes that this n & # 39; 39 is not so easy.

– No, it's not that simple. The figures released today were well below expectations, and about the same level as we have seen recently.

– The numbers are not worrying?

"No, I do not worry about 6.5% growth," Chen said.

Think it's getting worse

Olav Chen is part of the Norwegian delegation that has visited China in recent days. His goal with this trip was to gain knowledge about the consequences of the trade war on China.

"I think it's getting worse, and I think we'll see the trade war even more clearly in the next three to six months," said Chen.

This summer, President Donald Trump has introduced tariffs on Chinese imports worth $ 50 billion. It was not until mid-September that the trade war really broke out. Then Trump introduced an additional $ 200 billion tariff on Chinese products.

Trump has announced that the duty rate on these products will increase from 10 to 25 percent by the end of the year if China does not bend. What China needs to do to avoid this increase is unclear.

"Because of this, it is important to consider the effect in the fourth quarter of this year and the first quarter of next year," Chen said.

Will open the pump on credit

The managing director of Storebrand receives the support of senior analyst Mikael Olai Milhøj from Danske Bank.

– The growth of the Chinese economy has slowed down. The analyst writes that it's easy to blame for the trade war, but it's actually also dictated by national factors Twitter.

Chinese President Xi Jinping has tightened his fiscal policy, as well as his liquidity and monetary policy, with the aim of reducing his debt in China. Olav Chen think that this is an important reason for the slowdown of the Chinese economy.

"Jinping has screwed the pump on credit last year and we are seeing the effects now.I think they will reopen the cranes and loosen up their tax policy to revive the economy.

Chen believes that this is necessary both because the Chinese authorities have tightened the fiscal policy too much and because the trade war has intensified.

"I think the situation will get worse before it improves," Chen said.

"People are not safe"

Chen has traveled to China several times and has always found that the economists and investors he met were optimistic, despite concerns from the rest of the world. This time it's different, he says.

"The trade war has created uncertainty, and now people are a bit more dangerous," said Chen.

He says everyone knows that China does not have as many opportunities to couple the new trade barriers initiated by Trump, just as the Chinese do not know if the US wants an agreement.

"I think it's not a trade war, but a struggle to become a major power number 1. The Chinese are willing to make deals, but most think it's a political struggle to contain China, avoiding China to outstrip the United States as the world's leading power, "said Chen.

In addition, he believes that the pessimism of the Chinese is related to the fact that Xi Jinping has implemented several measures to strengthen the control of the state.

"Both to reduce debt, but also to more environmental demands.These are things that create friction in the machines," Chen said. (Conditions)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our business using a link directly to our pages. The copy or any other form of use of all or part of the content may only be done by written authorization or as permitted by law. For other terms please see here.