Weak Auto Sales In China Are Telling

Weak Auto Sales In China Are Telling

Issue 2

01.13.20 - Ford and GM have both reported horrible years in their Chinese sales for the third consecutive year - dropping 26.1% overall as the country battles a prolonged sales decline. China’s auto market is projected to contract by 2% this year as the economy weakens due to trade disputes with the United States.

Overall the no. 2 economy in the world has seen declining industrial production and a drop off in quarterly GDP growth over the past few years. China is still the monster of emerging markets, but regardless of those bonafides, Xi Jinping’s country seems to be struggling since the trade war was initiated – potentially making Beijing more eager to strike a trade deal with the U.S. if the economy worsens further.

Recent reports show that Beijing may reduce their GDP growth target as the trade war has reversed the countries growth trend. The tariffs have not only reduced imports from China, but also caused foreign companies to shift their supply chain out of China. While stocks in the U.S. soar to all-time highs and the dollar grows stronger, Chinese stocks are in a bear market (down 25% since last January), the yuan had its worst single month ever this past summer, and Chinese corporate bonds have defaulted at a record rate.

The fragility of the Chinese economy can be seen in things like the steep decline of the country’s large auto market, and an escalation of the trade war with the United Sates could tip China further towards the unknown territory of recession. Read More