China’s GDP grows at slowest pace since 2009

THE ECONOMY GREW 6.5% IN THE THIRD QUARTER FROM A YEAR EARLIER, SLOWER THAN 6.7% IN THE SECOND QUARTER

BEIJING: China’s economic growth cooled to its weakest pace since the global financial crisis in the third quarter, with regulators pledging further policy support as a yearslong campaign to tackle debt risks and the trade war with the US began to bite.

Chinese authorities are trying to navigate through numerous challenges, as the trade war fears have sparked a blistering sell-off in domestic stock markets and a steep decline in the value of the yuan versus the dollar, heightening worries about the growth outlook. The economy grew 6.5% in the third quarter from a year earlier, slower than 6.7% in the second quarter, the National Bureau of Statistics said on Friday.

The gross domestic product (GDP) reading was the weakest year-on-year quarterly growth since the first quarter of 2009 at the height of the global financial crisis.

“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.

After another big decline in Chinese stocks on Thursday, policymakers sought to soothe markets, with central bank governor Yi Gang saying equity valuations are not in line with economic fundamentals. Yi and senior regulators pledged targeted measures to help ease firms’ financing problems and encourage commercial banks to boost lending to private firms. The Shanghai Composite index, which slumped more than 1% in early trade, bounced back following the comments to be virtually flat at the midday break.

Third quarter growth was dragged down by the weakest factory output since February 2016 in September as automobile makers cut production by over 10% amid a sales slowdown. “The 6.5% figure is definitely below our consensus expectations. Weakness is largely coming from the secondary industry- most notably manufacturing. We may review our Q4 forecasts,” said Betty Wang, senior China economist at ANZ in Hong Kong.