Things aren’t looking great for Shaanxi’s economy – Shaanxi’s GDP up by 5.8% in the first three quarters of 2019

Cilitech

If you thought China’s 6% growth rate for third quarter, slowest pace in nearly 30 years, was bad, brace for worse for the Northwest China. Shaanxi, the economy powerhouse in Northwest China, grows only 5.8% in the first three quarters this year. Q4 GDP will typically revised up a little bit because of the year end effect, but it won’t change the overall picture.

The International Monetary Fund predicts that the Chinese gross domestic product will grow at a rate of 5.8% in 2020, according to its World Economic Outlook published over the weekend. Six months ago, the IMF had forecast a growth rate of 6.1%.

The downward revision was triggered by “the effects of escalating tariffs and weakening external demand,” which have “exacerbated the slowdown associated with needed regulatory strengthening to rein in the accumulation of debt,” the report states.

Nonetheless, Northwest China’s economy does not rely on export, which can be solved by Washington and Beijing, but on investment and consumption. Unfortunately, Cilitech does not seen any positive signs of consumption improvement.  Cilitech estimates that Shaanxi’s GDP will grow about 5.5% next year which is below the national average.

Compared to the rest of the world, China and Shaanxi’s growth rate doesn’t rattle Carl Weinberg, chief international economist at High Frequency Economics.

“It seems to us that in a world where average GDP growth is barely over 3%, China’s growth rate of 6% is not too shabby,” Weinberg said in a note.