President Trump took a victory lap at a campaign rally in Dallas, touting his tough stance against Beijing as the reason for a slowdown in the Chinese economy.
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“If my crooked opponent would have won the election, right now China would be, by far, the No. 1 nation from an economic standpoint in the world,” Trump said, referring to Democratic candidate Hillary Clinton, whom he defeated in the November 2016 presidential election. “We’ve gone up trillions of dollars, they’ve gone down trillions of dollars, and we are so far No. 1, so far that they’ll never catch us, if we are smart.”
Trump's comments came hours before a new assessment of the Chinese economy showed gross domestic product grew at a 6 percent rate, the slowest since 1992, when the National Bureau of Statistics began its recordkeeping.
Foreign direct investment data out this week showed inflows into China last month rose 0.5 percent in U.S. dollar terms, well below the 5 percent pace of the past five years. While non-manufacturing investment has picked up, it has been more than offset by a slump in manufacturing dollars, "presumably linked to the trade war,” China economists at London-based Capital Economics wrote on Friday.
“What’s more, the monthly figures only measure new investment and don’t capture foreign firms shifting out of the country, which would likely pull net inflows into negative territory,” the economists observed.
A slowdown in the Chinese economy has been exacerbated by U.S. tariffs imposed on about $350 billion of Chinese goods as Trump worked to curb the country's intellectual property theft and gain greater access to its markets. Duties on another $150 billion in merchandise are slated for December.
“I think it’s clear that the tariffs are our best defense against the theft of our technology but also the best insurance policy to have the Chinese come in good faith to the negotiating table,” Peter Navarro, White House adviser for trade and manufacturing policy, told FOX Business’ “Mornings with Maria” on Friday.
Economists at Tokyo-based investment bank Nomura expect China’s economy to slow further as the trade war presses on.
While it may see some stabilization in the near term due to U.S. companies front-loading purchases to avoid the upcoming tariffs, Nomura thinks that stability will be short-lived and expects the growth slowdown "to worsen in the coming quarters.” Its forecast is for GDP to slow to 5.8 percent in the last three months of the year.
“After decades of economic surrender, I have taken historic action to confront China’s rampant trading abuses and we’ve made great progress,” Trump said.