Published: Sat, October 19, 2019
Economy | By

China’s economic slowdown deepens, weighing on global growth

China’s economic slowdown deepens, weighing on global growth

China has been hit by a double whammy "at home and abroad" as GDP growth in the third quarter slowed to 6%, the lowest rate in almost three decades.

The Chinese economy grew 6.0 per cent in July-September, compared with 6.2 per cent in the second quarter, according to the National Bureau of Statistics (NBS).

China's economic growth sank to a new multi-decade low in the latest quarter as a trade war with the US deepened a slump that is weighing on the global economy.

Asian stock markets declined on the news.

A drying up of investment and weaker demand at home and overseas in the backdrop of the bruising trade war with the U.S. sent the economy to a tailspin.

"I don't think striking a deal with the USA and lifting those tariffs would resolve the issues the Chinese economy is facing", said Evans-Pritchard.

The latest economic growth figure was the lowest since China began reporting data by quarters in 1993.

"Authorities will loosen policies, but in a more restrained way".

During the first three quarters of 2019, China's GDP posted a growth of 6.2 per cent with respect to the same period of the previous year to stand at 69.78 trillion yuan ($9.86 trillion).

The data increase the risk that the government won't hit its target of achieving growth of between 6 per cent and 6.5 per cent for 2019, unless support measures are significantly stepped up.

Figures last week showed activity in the crucial manufacturing sector continued to contract last month as a result of the trade spat.

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.

Recent trade data has shown both deteriorating domestic demand with imports falling for the fifth consecutive month, while the slowdown in exports has accelerated. In September, factory gate prices (cost of a product excluding transportation or delivery cost) fell at their fastest pace in three years.

Growth in investment in factories, real estate and other fixed assets slowed to 5.4 percent for the first three quarters of 2019 from 5.5 per cent in the first eight months of the year.

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.

In fact, the US-China trade war is into a hotter round as the US has in place an additional tariff of 15 percent on about 3,200 imported Chinese goods worth US$110 billion as of September.

The uptick was in line with signs of increased domestic orders, though overall demand remains at historically weak levels.

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