Growth shadow over Chinese state visit
CHINA’S once booming economy has clocked up its slowest rate of growth for more than six years – casting a shadow over the global recovery.
On the day Chinese president Xi Jinping arrived in Britain for a state visit, official figures showed the world’s second largest economy grew at an annual rate of 6.9pc in the third quarter of the year. That was better than the 6.8pc expected by analysts but down from 7pc in the second quarter and the weakest reading since early 2009 during the depths of the Great Recession.
Independent experts have long-- been sceptical about official growth figures published by Beijing and warned the reality may be even worse.
Julian Evans-Pritchard, an economist at Capital Economics in Singapore, said China’s gross domestic product figures ‘need to be taken with a grain of salt’. He added: ‘While the official GDP figures continue to overstate the actual pace of growth in China by a significant margin, underlying conditions are subdued but stable.’
Many expected a sharper slowdown in the third quarter given the stock market collapse – dubbed the Great Fall of China – and the devaluation of the country’s currency. Critics pointed out the figure was suspiciously close to the 7pc target set by Beijing.
Patrick Chovanec, chief strategist at Silvercrest Asset Management, said the National Bureau of Statistics could not ‘look you in the eye and say 7pc with a straight face’ so opted for 6.9pc.
The Chinese economy grew by 7.3pc last year – its weakest performance for 24 years – and Beijing looks set to miss its target of 7pc growth this year. The International Monetary Fund is forecasting growth of 6.8pc this year and 6.3pc next year but others are more pessimistic.
Russ Mould, investment director at AJ Bell stockbrokers, said: ‘Headline GDP growth looks healthy at 6.9pc but underlying metrics suggest the real growth rate could be nearer 3pc to 4pc.’
Nancy Curtin, chief investment officer at Close Brothers Asset Management, was more upbeat. She said: ‘China’s economic weakness has spread its tentacles across industries, sectors and global companies, but this reading may be enough to ward off any calls for more aggressive stimulus.’