Andrew Polk, Columnist

China’s Growth Woes Aren’t Going Away

New stimulus measures won’t spark the rebound markets expect.

August 26, 2018 at 6:00 AM UTC

Andrew Polk is a founding partner of Trivium/China, a Beijing-based research firm, which produces a daily newsletter on China. He was formerly director of China research at Medley Global Advisors and chief economist at the Conference Board's China Center.

Local government spending on infrastructure has slowed dramatically.
Photographer: Johannes Eisele/AFP/Getty Images

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U.S. officials seem to think they have the upper hand in trade talks with China because its economy is struggling. Judging by the string of measures they’ve recently announced to shore up growth, Chinese officials may privately agree. The trouble is, such measures aren’t going to work as fast or as well as markets seem to think they will.

China’s growth woes are homegrown, not the result of U.S. tariffs. Two factors are largely to blame: the government’s concerted effort over the last five quarters to tighten credit and stabilize China’s debt levels, and, relatedly, a dramatic dropoff in investment spending by local governments.