China’s economy registered its slowest growth rate since the global financial crisis in the third quarter, as the trade war with the United States took its toll and the weakening yuan versus the dollar darkened the outlook for the world’s second biggest economy.
The economy grew 6.5 per cent in the the July-September quarter from a year earlier, slower than the 6.7 per cent chalked up in the second quarter, according to data from the National Bureau of Statistics.
In a Reuters poll, analysts had expected the economy to expand 6.6 per cent in the third quarter.
This marks the lowest year-on-year quarterly growth rate since the first quarter of 2009, during the global financial crisis.
“In general, the economy for the first three quarters remained a stable trend. Meanwhile, external uncertainties apparently increased, and the pain of domestic structural adjustments persists. Amid stability, there is change and a slowdown in the Chinese economy, the downward pressure of the economy has increased,” NBS spokesperson Mao Shengyong told reporters.
Mao said China would was capable and confident of reaching its annual economic growth target of around 6.5 per cent this year despite the increasing downward pressure, and the economy will maintain steady growth next year, a spokesperson of the country’s statistics bureau said on Friday.
Industrial output rose 5.8 per cent in September from a year earlier, undershooting a forecast of 6 per cent, the statistics office said, while retail sales bounced back last month to grow 9.2 per cent, slightly higher than a forecast 9 per cent.
Fixed-asset investment climbed 5.4 per cent in the first nine months, versus a forecast of 5.3 per cent, and urban monthly unemployment was 4.9 per cent at end-September
“The trend of slowdown is strengthening despite Chinese authorities’ pledge to encourage domestic investment to support the economy. Domestic demand turned out weaker than unexpectedly solid exports,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.
Chinese stock markets have been roiled of late by the tit-for-tat trade war between the US and China.
People’s Bank of China governor Yi Gang gave the markets a lift when he said equity valuations were not in line with economic fundamentals, and the central bank governor along with the heads of the banking, insurance and securities regulators have promised targeted measures to help ease financing problems and encourage commercial banks to boost lending to private firms.
Weaker consumer spending in China has seen carmakers cut production by over 10 per cent. Car sales fell the most in nearly seven years in September, with GM sales down 15 per cent and Volkswagen sales down 10.5 per cent.
Frederic Neumann, co-head of Asian economics research at HSBC in Hong Kong, told Bloomberg that China’s economy was losing steam.
“While it’s easy to blame the trade tussle with the US for this, the deceleration so far is mostly domestic driven, with infrastructure spending contracting and car sales coming off the boil,” he said. (Additional reporting: Agencies)
