Beaufort Analysis No. 302 – Time after Time
Last week, China reported its slowest rate of growth since the Financial Crisis 10 years ago. The rate of growth was still a healthy 6.5% but this was lower than the expected 6.6%. It is, however, still on track for the Chinese government’s target of 6.5% for the year. By comparison, the UK’s 2018 GDP target is 1.4% and the US’s, 2.9%. This GDP data is the first data for China since President Trump applied his tariffs to $250bn of Chinese imports, however there are increasing domestic pressures that are likely behind the slower rate of growth. China’s debt burden is enormous, with a possible $6 trillion of debt hidden off the balance sheet by local governments to avoid Beijing’s lending limits. The growth figure was pulled down from the previous quarter due to a decline in domestic demand for cars, resulting in a fall in auto manufacturing.
Theresa May has stated that she is open to considering extending the post-Brexit transition period in order to resolve the Irish border issue. The Prime Minister has said it would only be for a few months whilst the budget payments to the EU and membership of the customs union would still apply during this time. Angela Merkel has now said that both the EU and the UK need more flexibility in their approach to not leave the only option to Northern Ireland a hard border. Over half a million people marched through London over the weekend in support of a new vote, the People’s Vote. But, after last week’s EU summit, it seems that a deal is no closer as the Irish border remains the sticking point.
A number of officials have dropped out of attending Saudi Arabia’s Future Investment Initiative over the killing of Jamal Khashoggi. These officials include Liam Fox, the UK’s International Trade Secretary, Steve Mnuchin, the US Treasury Secretary and Christine Lagarde, head of the International Monetary Fund. Fox Business Network and Goldman Sachs have also pulled out, with others urging BAE systems to also withdraw. Saudi Arabia is one of the largest nations for UK trade in the middle east, with 2016 exports from the UK, totalling over £6 billion.
As a week seems unable to pass without Donald Trump pulling the US from one deal or another, the US has withdrawn from its 1987 Nuclear treaty with Russia. President Trump claims that Russia has been violating the treaty for years, which Russia denied. Originally agreed by President Reagan towards the end of the Cold War, the treaty banned the use of medium-range ground launched missiles. Barack Obama previously criticised the treaty when he was President, however no action was taken due to pressure from other global leaders. This is seen to be a considerable setback for arms control globally.