Growth of economy China can be slowed down to 2% next decade
With China’s economic growth near a three-decade low, having reached 6.4% in 2018, there is a lot of concern about the global crude oil market’s performance this year. Without doubt, the impact of the country’s trade war with the US cannot be ignored, but meanwhile there are several other parameters to consider.
China’s heavy debt load might be the most severe one, primarily driven by the slowdown of the investment-led governance system in parallel to the strict pollution policy affecting both domestic demand and export growth. In parallel to that, this emerging economy is starting to mature into a developed one, making it rather difficult for the growth rate to be maintained at such high levels as experienced during the last decade.
Only Chinese retail and industrial production show positive economic impact
Beijing’s efforts to stimulate economic growth proved strong enough, but only to an extent, as only retail sales and industrial production seem to respond positively so far. The only solution for Xi in the medium-long term might be to complete negotiations successfully and support his country’s businesses.
The temporary peace offerings meant that China could begin to import US crude oil once again, after a 120-day break. The world’s leading importer and demand’s major driver absorbed around 9.25 Mn bpd during 2018, almost 10% up year-on-year. Demand is, however, not expected to increase that fast in 2019, because of the trade war and the economic slowdown.