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Chinese Companies' Capex Investments Slow, Could Get Worse as Trade War Drags On

Chinese Companies’ Capex Investments Slow, Could Get Worse as Trade War Drags On

Posted Wednesday, December 4, 2019 by
Arslan Butt • 1 min read

Chinese companies’ capital investments have reduced to the lowest levels in three years over escalating trade tensions with the US wreaking havoc on its economy and tightening credit. According to Reuters, companies are taking longer to process their inventories towards manufacturing finished goods which are further narrowing their profits.

Capital spending by Chinese companies rose by 1.6% YoY in the three months through September. This was the weakest growth in capex seen since three years.

China’s GDP has slowed to a three-decade low and with no end in sight for the trade war with the US, there may be more troubling times ahead for Chinese businesses. On Tuesday, US President Donald Trump hinted at the possibility of the trade war being resolved only after the 2020 presidential elections, heightening trade tensions’ impact on global markets all over again.

In recent weeks, there was some hope in the markets that the US and China were progressing towards finalizing a phase one trade deal, possibly as soon as within this year, which would have been the first concrete step towards resolving their trade conflict. However, political tensions between the US and China are on the rise, first on the issue of the Hong Kong protests and now on the issue of China’s mistreatment of Uighur Muslims.

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