The Chinese yuan is weakening on Tuesday as new reports of African swine fever are sending economic ripples across the nationâs agricultural sector. The bearish news did not end there as industrial profits slowed in October and forecasts show growth will cool down next year.
Since August, swine fever has killed approximately one million pigs, and the government has prohibited the shipment of most of the 700 million swine. This is a trend that has disrupted inventories and shipments to large cities, which is bad news for the nationâs countryside.
Chinese pig farmers have already been contending with rising feed costs amid Beijingâs trade dispute with the US. Despite the US-China trade spat, farmers note that they have been managing to break even at current prices. However, if the outbreak intensifies in the coming weeks, then many farmers may be in the red.
The disease does not affect humans, but it is contagious among pigs.
Meanwhile, profit growth at the nationâs industrial companies was sluggish for the sixth consecutive month in October. According to the National Bureau of Statistics (NBS), industrial profits advanced 3.6% in October to a seven-month low of $108.5 billion, down from 4.1% in September. The disappointing figures stem from rising factory prices and growing question marks surrounding the global trade conflict.
The private sector is facing multiple obstacles entering into the new year. Last week, it was reported that China is bracing for a wave of corporate defaults because of rising borrowing costs and a falling yuan.
A new study from Renmin University suggests that Chinese economic growth is projected to reach 6.6% in 2018 and then slow down to 6.3% in 2019. As expected, the trade spat, as well as structural reforms, are the chief causes for the tepid growth.
The USD/CNY currency pair rose 0.16% to 6.9517, from an opening of 6.9408, at 17:57 GMT on Tuesday. The EUR/CNY dipped 0.15% to 7.8551, from an opening of 7.8670.
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