BEIJING: China’s economy grew at the slowest rate in 27 years in the third quarter, official figures showed on Friday, as the country grapples with a protracted trade war with the US and slowing domestic demand. Gross domestic product (GDP) figures showed that the Chinese economy expanded 6.0 per cent in July-September, compared with 6.2 per cent in the second quarter.
It marks the worst quarterly figure since 1992, although still within Beijing’s target range of 6.0-6.5 per cent for the whole year.Unveiling the data, Mao Shengyong, spokesman for the National Bureau of Statistics, said the country was “faced with mounting risks and challenges both at home and abroad”. However, he said the “national economy maintained overall stability… and improved living standard”. Chinese trade has suffered from US tariff hikes in a fight over Beijing’s trade surplus and technology plans. The third-quarter performance was also at the bottom end of the government’s full-year economic growth target of 6.0-6.5 per cent. China’s economy grew at 6.6 per cent in 2018. China’s trading partners and investors are closely watching the health of the world’s second-largest economy as the trade war with the United States fuels fears about a global recession.”There is a lot of uncertainty, still, regarding the US-China trade agreement,” said Ho Woei Chen, economist at UOB in Singapore. “I think the December 15 tariffs will have very important implications for Chinese growth in 2020. Beijing’s approach has been rather measured and targeted and they will continue to be so. “Downbeat data in recent months has highlighted weaker demand at home and abroad. Still, most analysts say the scope for aggressive stimulus is limited in an economy already saddled with piles of debt following previous easing cycles, which have sent housing prices sharply higher. The outlook is unlikely to change for the better any time soon even as tensions in the protracted trade war between Beijing and Washington have eased somewhat. US President Donald Trump said last week the two sides had reached agreement on the first phase of a deal and suspended a tariff hike, but officials said much work still needed to be done. A slide in China’s exports accelerated in September while imports contracted for a fifth straight month.
The drags on demand, both domestic and global, have hit several key parts of the economy with weakness seen in freight shipments, factory power generation, employment and entertainment spending. In September, auto sales posted their 15th straight month of decline while factory gate prices fell at their fastest pace in three years.
The International Monetary Fund has warned the US-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, but said output would rebound if their dueling tariffs were removed.
Beijing has relied on a combination of fiscal stimulus and monetary easing to weather the current slowdown, including trillions of yuan in tax cuts and local government bonds to fund infrastructure projects and efforts to spur bank lending.
But the economy has been slow to respond with business confidence shaky and local governments facing increasing strains as tax cuts hit revenues, weighing on investment.