China’s growth slows to weakest level in 27 years
China’s economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, data showed today.
Chinese gross domestic product expanded 6% in the three months from July to September, down from 6.2% in the second quarter, according to the National Bureau of Statistics (NBS).
The reading – in line with an AFP survey of 13 analysts – is the worst quarterly figure since 1992 but within the government’s target range of 6-6.5% for the whole year.
China’s economy grew by 6.6% in 2018.
“The national economy maintained overall stability in the first three quarters,” said NBS spokesman Mao Shengyong.
“However, we must be aware that given the complicated and severe economic conditions both at home and abroad, the slowing global economic growth, and increasing external instabilities and uncertainties, the economy is under mounting downward pressure,” he said.
Services and high-tech manufacturing were the key areas of growth, while employment was “generally stable”, he added.
Beijing has stepped up support for the economy with major tax and rate cuts and has scrapped foreign investment restrictions in its stock market.
Earlier this week the central bank said it was pumping 200 billion yuan ($28 billion) into the financial system through its medium-term lending facility to banks, which is designed to maintain liquidity.
But the efforts have not been enough to offset the blow from softening demand at home.
The trade conflict and weak domestic demand prompted the International Monetary Fund to lower its 2019 growth forecast for China to 6.1% from 6.2% on Tuesday.
The long-running trade war with the US has also chipped away at the Chinese economy.
This week, Beijing posted weaker-than-expected import and export figures for September after Washington imposed new tariffs that month.
And there were mixed signals for China’s economy in September.
Industrial output rose 5.8%, from 4.4% in August, led by a surge in demand for solar panels and electric vehicles, according to the NBS.
But fixed-asset investment slid to 5.4% year on-year in the nine months from January to September, from 5.5% in January to August, as the government warned against risky borrowing to build roads and bridges that could artificially pump up GDP in the short run.
China’s army of consumers were slowly starting to open their wallets again, with retail sales edging up 7.8%year-on-year in September, compared with 7.5% in August.
Analysts said that despite a stronger September, pressure on economic activity should intensify in the coming months.
They said they expects infrastructure spending to decline as China tries to rein in toxic debt and added that the recent boom in property development looks set to unwind.
A “phase one” deal announced by US President Donald Trump last Friday after he met China’s top negotiator Liu He in Washington offered a temporary reprieve from further tariff hikes.
NBS spokesman Mao said the mini-deal was “good sign” for global markets.
“We feel that the global economy and global trade are increasingly moving towards reducing protectionism and freedom,” he said.
The deal, however, did not roll back any of the stinging tariffs already imposed on hundreds of billions of dollars in trade between the economic powers, nor did it address another round of import taxes planned for December.
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