China's economic growth could fall under 6% in 2020
The International Monetary fund revealed in its latest World Economic Outlook that economic growth in China could slow to 5.8% in 2020 following an expansion of 6.1% in 2019.
“The Chinese economy is slowing down, which has continued an earlier trend of slowing down, which started a couple of years ago,” Tao Zhang, the IMF’s deputy managing director told CNBC on Saturday.
Tao Zhang added that such growth rates were still “reasonable” given that China was going through a period of economic restructuring as it looked for a sustainable growth strategy.
“In recent years, what’s going on in the world — we have trade tensions, we have other geopolitical forces, we have all these uncertainties around the world [...] these add further downside pressures to the Chinese economy,” he said.
On Friday, China announced that its economy grew at a 6% pace during the third quarter, its slowest clip since the first quarter of 1992, according to Reuters’s records.
The projected slowdown for next year contrasted with the Fund's forecast for a recovery in the global economy which was expected to rebound to 3.4% growth following an anticipated slowdown to 3% after growing by 3.6% in 2018.
Former IMF head and future ECB chief Christine Lagarde said on Monday that the US-China trade war was set to negatively impact the global economy and made clear that US President Donald Trump was the one holding the key to solving the dispute.
“I think the biggest key that President Trump has is in relation to predictability and, and certainty of the terms of trade. It's the unknown which is hurting, because you can't adjust to the unknown. So what do you do? You build buffers. You build savings. You wonder what comes next. That's not propitious to economic development,” she said.
She also attributed part of the slowdown in the economy to the fact that investors were “sitting on their cash”.