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China's disappointing GDP numbers prompt U.S. banks to trim forecasts

China's GDP grew just 0.8% in April-June from the previous quarter, which is lower than analysts were expecting. The slower-than-expected growth has led to several of the top U.S. banks cutting their growth projections for the Chinese economy. "The rest of the world isn't looking as good as the U.S. is looking right now," says Ben Eisen, a reporter for the Wall Street Journal. Eisen explains how current numbers have led to "a more realistic outlook" on the relationship between the U.S. and Chinese economies.

Video Transcript

- China's disappointing GDP numbers for the second quarter led several US banks to cut their forecasts for the nation's full-year growth as China struggles to move ahead in its post-covid economic recovery. Ben Eisen is still with us, "Wall Street Journal" reporter. So as we're looking at sort of the big economic picture and we're looking at China, how should we be sort of framing that issue?

BEN EISEN: Yeah, it's interesting that we're now sort of talking about the global economy when transferring right after talking about the big bank earnings because the big bank earnings have sort of presented this picture of this possible soft landing in the US, but that's really not what we're seeing in a lot of other countries.

So right, China had these very disappointing GDP numbers. The euro area slid into recession earlier this year. The rest of the world isn't looking as good as the US is looking right now. So there is kind of this disconnect that we're seeing as we look at kind of all the events that we've had, how they're weighing on various countries. So it's good to be the US economy right now and less so other parts of the world.

- And Ben, there was a recent Goldman report basically downgrading some Chinese banks. What is the expectation that we're going to see a downgraded Agricultural Bank of China, Commercial Bank of China, and the list goes on. What is the expectation that we would see about exposure and kind of potential pullback of exposure in US banks from China?

BEN EISEN: You know, it's really hard to say right now. You know, I'd point to what Jamie Dimon said when he was in China a few months ago that he kind of took the language that US officials have taken that there's not a decoupling between the US and China.

It's more of a-- it's sort of a more realistic outlook on the bank-- on the country itself. So a lot of these banks are very committed to being in China. Their relationship just might look a little bit different than it has in the past.

- Ben, good to see you. Ben Eisen, "Wall Street Journal" reporter. Thanks.