China's Economy is Slowing. Do Chinese Blame the Trade War?

Patterns of online attention suggest the trade war may not be stinging China as much as some Western media assume.

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Data released yesterday showed China’s economy grew at a rate of 6.2% in the second quarter of this year, the slowest pace in nearly 30 years. Still, that figure was in line with expectations, and there were upside data points, especially related to domestic consumption. Retail sales growth, for instance, increased from 8.6% year-on-year in May to 9.8%. Nonetheless, imports and exports were both weak, and it is likely that growth will continue to slow for the rest of the year. 

Media headlines trumpeted the impact of the trade war on China’s economy. But patterns in web browsing reveal that though international observers are again paying attention to the dispute, Chinese-speaking internet users are focusing elsewhere. 

After being elevated in late May amid an escalation in tensions, global online attention to the US-China trade war fell off even through the G20 summit at which President Trump and Chairman Xi struck a truce to avert further tariffs. Attention surged in the last week, however, indicating that the trade war has again become a salient issue to international observers.
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Online attention to trade also spiked among Chinese observers. But the individual subjects that typically drive online attention toward the US-China trade war, such as Trump Administration trade officials and orders, were muted. The top driver of the signal was attention to Chinese-language web pages about the US Federal Trade Commission. Days ago, the Wall Street Journal reported the FTC reached a settlement with Facebook, in which the company would pay a record $5 billion fine for the repeated privacy violations. That news appears to have captured Chinese speakers’ interest more than the effects of the trade war.

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Chinese attention appears to be more directed toward mainland credit markets. In May, the near-collapse of mid-sized commercial lender Baoshang Bank triggered a liquidity crunch and renewed interest in counterparty risk, as large banks became unwilling to lend to smaller ones. The government took over Baoshang and guaranteed its troubled loans. In a bid to inject liquidity into the market, local government bond issuances have surged since June. Chinese-language interest in government bonds spiked to its highest level in more than a year last week.

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The picture that emerges from these patterns of online attention is at odds with the one painted by most media: For Chinese-speaking internet users at least, the effects of the trade war are less salient than issues of debt and credit.