China’s economy grew at its slowest pace in nine years in the third quarter, as a campaign to tackle mounting debt and trade frictions with the US had an effect.
The world’s second largest economy expanded by 6.5 percent in the July-to-September period year-on-year, according to official GDP figures released Friday by China’s National Bureau of Statistics.
The rate is down from 6.8 percent and 6.7 percent in the first and second quarters, respectively, but in line with a growth target of roughly 6.5 percent for the year set by China’s economic policymakers.
“Faced with an extremely complex environment abroad and the daunting task of reform and development at home”, China’s economic growth remained generally steady, said NBS spokesman Mao Shengyong.
The trade row with the US comes at a tough time for China’s economy, which has been hit by the government’s efforts to tackle a mountain of debt, with credit tightening and infrastructure investment falling.
The data Friday showed fixed-asset investment ticked up 5.4 percent on-year in the January-September period from record lows the year earlier when Beijing was reining in spending on bridges, railways, and highways.
Analysts say the slowing growth could prompt an end to Beijing’s fiscal prudence.
China’s cabinet has already indicated it will step up support and quicken infrastructure project approval in the coming months — though experts do not expect the measures to kick in until next year.
The gloomy export picture has reinforced the need for Beijing to rely on its legion of consumers to grow its economy.
Retail sales, a window into Beijing’s aim to get consumers spending to drive the economy, expanded 9.2 percent for the month compared with last year, from 9.0 percent in August and ahead of estimates.
– Trade war –
Relations between the world’s two largest economies have soured sharply this year, as US President Donald Trump turned to hiking tariffs to force concessions in trade negotiations with Beijing.
Washington has hit roughly half of Chinese imports while Beijing has taken aim at most US imports.
Exports still drive a significant chunk of China’s economy and Washington’s tariffs targeting cars, machinery, electronics, consumer appliances and others have led many firms to shift production and hold off on further China investment.
So far exports to the US have held up but economists expect trade frictions to weigh on growth in the coming months and into next year.
The conflict has more directly hit confidence in China.
Shanghai’s stock market has fallen by roughly a quarter this year, while the yuan has slipped about nine percent against the dollar.
“If the market becomes a bit panicked… that can dampen investment, investment and trade are closely linked so this can be a vicious cycle,” said Lian Weicheng, an economist at the International Monetary Fund.
Business surveys already show many US and European firms halting investment plans for China as trade tensions cloud future prospects.
SOURCE: AFP, Ryan McMorrow