According to Fathom Consulting, a global independent macro research consultancy, it's proprietary China Momentum Indicator 2.0 has slowed to 4.6% in June, the lowest reading since Aug. 2016.
There is also a growing gap between the China Momentum Indicator 2.0 at 4.6% and official GDP data at 6.2%. Might suggest China's economy hasn't yet bottomed, could continue to decline through 2H19 into 1H20.
Gary Cohn, the former chief economic advisor to Donald Trump, has said the slowdown predates the trade war and reflects a strategic decision by China to rebalance the economy.
Fathom notes that China's economy was even slowing before the rebalancing.
The global macro research firm said, "with the consumer share of total import demand on a downward trend since 2016, we also find little evidence to suggest that China is successfully rebalancing."
To combat dangerous crosscurrents of the trade war disrupting global supply chains in and out of China, Chinese policymakers resorted to the same playbook as before, pump the economy with record amounts of the stimulus earlier in the year.
Currency depreciation came into the picture when President Trump escalated the trade war by raising tariffs to 25% from 10% on $200 billion of Chinese goods in May. Then a massive devaluation of the renminbi followed in early August, when the president slapped 10% tariffs on $300 billion worth of Chinese goods, effective Sept. 1.
"Trade talks are continuing, and during the talks the U.S. will start, on Sept. 1, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!" Trump said in a tweet last month.
Since the trade war began last March, the renminbi has weakened 13% against the U.S. dollar, neutralizing some of the tariffs imposed by the U.S. on imports from China.
Currency devaluation undermines hopes for a soft landing, while further infuriating the Trump administration who has recently branded China as a currency manipulator.
And for more bad news, China has said its rebalancing will continue through 2020 and offered a pessimistic view of how Beijing won't sign a trade deal until after the November 2020 election. This would almost guarantee China is allowing its export economy to weaken while stimulating its domestic economy, all in the attempt to trigger a recession in the U.S. to diminish President Trump's probabilities of getting reelected.