The forecast is gloomy for China's vaunted economy. After enjoying a period of record economic growth, they're caught in a record downward spiral right now, thanks to the Trump administration's restrictive tariffs. However, there are those who believe that it's not yet time to push the panic button.
August was viewed as a dire month for Chinese economic growth as fixed-asset investment-meaning homes, factories, and infrastructure spending-went at the slowest rate possible. The decline is hugely attributed to the punitive US tariffs, The Epoch Times notes. Business is just business, and the tariffs are making business owners more than just cautious to spend on investments.
It is also a point of interest to China's policymakers, as Beijing is watching the events unfold with the utmost concern. Even as Trump approved the imposition of tariffs the first time around, his administration is already looking to impose another round of tariffs on Chinese goods. This makes it look bad for China's economy-or so it seems.
There are three myths which Forbes points out that is currently making itself felt. The first is that the Chinese stock market is slowing down, and the drop in equities is a sign that the Trump administration is doing the right thing with the tariffs. Another is that the yuan is steadily weakening, a sure sign of trouble; rounding these out is that the crash of the Chinese economy is because of its debt.
For the first myth, it is not a certain indicator of the slide of China's economy. The economy of China is driven primarily by bank lending. China's GDP and stock market are hugely independent of each other, so any signs shown by the stock market shouldn't be taken at face value. In the yuan's case, the US dollar's rise against it is a poor indicator. All currencies suffer against the dollar largely because of uncertainty in the events instigated by none other than Trump himself.
Lastly, China's debt, if ever there is any, is hugely domestic, making it a moot point to indicate being debt-ridden as a sign that China is, by all indications, in trouble.
China has a lot of plans prepared in the case the 'economic slowdown' worsens, like stimulus packages. However, to say that Trump's tariffs are really making life difficult for the Chinese economy is merely an overestimation of facts.
