Stocks Falter as China Announces Slowest Economic Growth in Nearly 30 Years
Samantha McDonald
Business Editor
The stock market opened in the red on Tuesday morning as new anxieties over China‘s impact on the global economy plagued Wall Street following the long weekend.
A day after major benchmark indexes closed for Martin Luther King Jr. Day, the Dow posted a 170-point loss (or 0.7 percent), while the S&P 500 dropped 0.55 percent and the Nasdaq Composite declined 0.7 percent.
The dip followed yesterday’s news that China’s annual economic growth rate came in at 6.6 percent last year, marking its slowest pace since 1990. Its fourth-quarter GDP growth hit 6.4 percent — a decline from the 6.5 percent year-over-year gain in 2018’s third quarter.
President Xi Jinping reportedly called a meeting of high-level officials, urging them to remain alert over a slowdown in the country’s economy, which many investors fear will spread beyond its borders. According to the state-run Xinhua News Agency, Xi instructed members of his Communist Party to “prevent and defuse major risks” across politics, technology and other sectors to “ensure a healthy economy and social stability.”
Among those concerns are the trade tensions between Beijing and Washington, which have been in talks to strike a permanent trade deal following a tit for tat that has already seen tariffs on $250 billion worth of Chinese imports and levies on $110 billion of United States goods. If both countries fail to settle on a deal come March 1, President Donald Trump warned that his administration will go ahead with his threat to raise levies from 10 percent to 25 percent on $200 billion of those Chinese goods.
In a tweet posted yesterday, Trump said: “Makes so much sense for China to finally do a Real Deal, and stop playing around!”
The comments come two weeks after the conclusion of midlevel negotiations in Beijing, with another meeting expected in Washington at the end of the month. (Treasury Secretary Steven Mnuchin said that Chinese Vice Premier Liu He will “most likely” sit with his U.S. counterparts on Jan. 30 and 31, including U.S. Trade Representative Robert Lighthizer.)
Early this month, markets around the world suffered losses when a report from China — one of the world’s largest economies — revealed that its vast manufacturing sector was contracting. Trading has also been affected by the partial U.S. government shutdown, now in its fifth week, as well as the Federal Reserve’s decision to increase interest rates and British Prime Minister Theresa May’s second attempt at a Brexit deal.
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