Fears of a global economic slowdown came to a head this week after both Germany and China reported bleak economic data, a sign that President Trump's tariff war with China is causing serious damage to the world economy.
Germany reported Wednesday that its economy shrank by .1% in the last quarter, following an overall unsteady year as the country faces challenges from the US-China trade war and a disorderly Brexit. Analysts are saying that prospects for an economic recovery look grim: "Today's GDP report definitely marks the end of a golden decade for the German economy," said Carsten Brzeski, chief economist at ING Germany.
China too seems to be stumbling, with Chinese industrial output and property investment down and unemployment up. Some analysts are saying this is a sign that China is faltering under the weight of Trump's tariffs, but if China goes down it surely will not go down alone.
Germany relies heavily on exports and is closely linked to the Chinese economy, which makes it especially vulnerable amid the onslaught of tit-for-tat tariffs between China and the United States. Germany's auto sector in particular has taken a big hit since the start of the trade war. Automobiles are Germany's largest export, and as Chinese consumers pull back from making large purchases, the entire German economy seems to be feeling the heat of its waning auto industry.
Economic reports from Thursday also indicated that the US was facing strains in several key areas, which brought stock markets back down after Wall Street saw a brief boost Wednesday when the Trump administration postponed its plans to levy new tariffs on $156 billion of Chinese goods, citing concerns over holiday shopping in the US. The next round of trade negotiations are set for September, although a truce seems to be increasingly unlikely.
Prepared by China-US Focus editorial teams in Hong Kong and New York, this weekly newsletter offers you snap shots of latest trends and developments emerging from China every week, while adding a dose of historical perspective.