China’s slowing economy hits global growth
Weak data raises the likelihood of interest rate cuts and other stimulus to shore up growth there
BEIJING — China’s economic growth sank to a new multi-decade low in the latest quarter as a trade war with Washington deepened a slump that is weighing on the global economy.
Growth in the world’s second-largest economy slipped to 6% in the three months ending in September, down from the previous quarter’s 6.2%, data showed Friday. It was the weakest level since China started reporting data by quarters in 1993.
The slowdown and weakening consumer demand add to headaches for Chinese leaders as they fight a 15-month-old tariff war with President Donald Trump that has sapped China’s exports.
Still, the slowdown will not necessarily compel decision makers in Beijing to reach an agreement with Trump since domestic factors, rather than trade, are having a bigger impact on the economy, said Julian Evans-Pritchard of Capital Economics.
“I don’t think striking a deal with the U.S. and lifting those tariffs would resolve the issues the Chinese economy is facing,” said Evans-Pritchard. “It would be only a modest boost.”
The weak data raises the likelihood of interest rate cuts and other stimulus to shore up growth and avert politically dangerous job losses. Chinese leaders have boosted government spending, but avoided large-scale stimulus that might add to debt that already is so high that rating agencies cut Beijing’s credit rating.
“More aggressive stimulus can be expected,” said Bill Adams of PNC Financial Services Group in a report.
The slowdown in China, the world’s biggest trader, has global repercussions. It is depressing demand for industrial components from Asian countries. Prices of soybeans, iron ore and other commodities have fallen, hitting Brazil, Australia and other suppliers.