Image source: eblisgalea © 123RF.com
The National Bureau of Statistics of China delivered its yearly Gross Domestic Product data for 2019 earlier today, which met with the consensus forecasts.
The GDP growth rate remained unchanged at 6 per cent, the lowest rate on record since 1990.
Thus, the Chinese economy advanced at the same rate on a year-to-year basis for the second consecutive time.
China GDP Growth Rate. Image source: TradingEconomics.com
The economic slowdown in the world’s second-largest economy is owing mostly to the trade uncertainty that was created because of the trade war with the US and Donald Trump’s unpredictable nature.
Most analysts estimate that his sanctions on Chinese imports are not exerting such a heavy toll on the Chinese economy; however, the primary issue is the resulting uncertainty.
It is yet uncertain whether the recently signed Phase One of the trade negotiations between the two countries would mark the beginning of the end of the trade war or whether it would prove to be nothing more than a temporary ‘ceasefire’.
At the present rate, the temporary de-escalation of the trade dispute is benefiting Trump and also his Chinese counterpart – Xi Jinping, who are both currently dealing with internal political issues at home.
In case that a sustainable long-term solution to the current gridlock in global trade is found, the Chinese growth rate can be anticipated to pick up steam into the second part of 2020.
At the present rate, however, the situation remains too volatile for any major projections to be drawn in early January.
Meanwhile, the Chinese yuan strengthened against the greenback following the release of the economic data.
The USDCNY pair fell by 0.30 per cent Friday morning, and by doing so managed to break down below the major support level at 6.8808, which is also the 61.8 per cent Fibonacci retracement level.
The price is currently nearing the last major test – the support level at 6.8470 – in the current bearish trend’s progression.
If the price bounces back, however, it is likely to get within the boundaries of the bearish channel on the daily price chart.
USDCNY 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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