Chi­nese try­ing to re­as­sure in­vestors amid slow­down

Daily Southtown (Sunday) - - Business - By Joe McDon­ald

BEI­JING — China re­ported that eco­nomic growth sank to a post­global cri­sis low as fi­nance of­fi­cials launched a me­dia blitz Fri­day to shore up con­fi­dence in its sag­ging stock mar­ket.

Growth in the quar­ter that ended in Septem­ber slipped to 6.5 per­cent over a year ear­lier from the pre­vi­ous quar­ter’s 6.7 per­cent, of­fi­cial data showed. It­was the slow­est rate since early 2009.

The­world’s sec­ond-largest econ­omy al­ready was cool­ing be­fore a tar­iff war be­tween Bei­jing and Pres­i­dent Don­ald Trump erupted.

Bei­jing tight­ened con­trols on lend­ing last year to rein in a debt boom. That has weighed on hous­ing sales and con­sumer spend­ing. Car buy­ers are steer­ing clear of deal­er­ships.

Credit con­trols and trade ten­sions are “tak­ing a bite out of eco­nomic mo­men­tum,” said Bill Adams of PNC Fi­nan­cial Ser­vices Group in a re­port.

The im­pact of Trump’s penalty tar­iffs of up to 25 per­cent on Chi­nese goods in a dis­pute over Bei­jing’s tech­nol­ogy pol­icy has been lim­ited. But with the rest of their $12 tril­lion-a-year econ­omy slow­ing, the com­mu­nist lead­er­ship has re­versed course and or­dered banks to lend.

“Down­ward pres­sure has in­creased,” said Mao Shengy­ong, a gov­ern­ment spokesman.

Of­fi­cials led by China’s eco­nomic czar, Vice Premier Li­uHe, tried Fri­day to re­as­sure in­vestors about a stock mar­ket that has sagged 30 per­cent since Jan­uary.

The de­cline is “cre­at­ing good in­vest­ment op­por­tu­ni­ties,” Liu said in com­ments car­ried by the of­fi­cial Xin­hua News Agency, news­pa­pers and web­sites.

The bench­mark Shang­hai Com­pos­ite In­dex ended the day up 2.6 per­cent.

The gov­ern­ment also said in­sur­ers will be al­lowed to cre­ate prod­ucts to help sta­bi­lize the mar­ket by re­duc­ing “liq­uid­ity risk.” That refers to fears lenders that ac­cepted stock as col­lat­eral for loans might sell, flood­ing the mar­ket and driv­ing a new price col­lapse.

Re­tail sales, fac­tory out­put and in­vest­ment in fac­to­ries and equip­ment all weak­ened in the lat­est quar­ter.

The con­flict with Wash­ing­ton has prompted Chi­nese lead­ers to step up a marathon ef­fort to en­cour­age self-sus­tain­ing growth driven by do­mes­tic con­sump­tion and re­duce re­liance on ex­ports and in­vest­ment. Bei­jing has cut tar­iffs, promised to lift curbs on for­eign own­er­ship of auto pro­duc­ers and taken other steps to rev up growth.

But lead­ers have re­fused to scrap plans such as “Made in China 2025,” which calls for state-led cre­ation of Chi­nese cham­pi­ons in robotics and other tech­nolo­gies.

The U.S., Europe and other trad­ing part­ners say those vi­o­late Bei­jing’s mar­ket-open­ing com­mit­ments. But Chi­nese lead­ers see the­mas a path to pros­per­ity and global in­flu­ence.

Wash­ing­ton has raised tar­iffs on $250 bil­lion of Chi­nese goods and Trump says he might ex­tend penal­ties to al­most all im­ports from China. Bei­jing re­sponded with its own tar­iff hikes on $110 bil­lion of Amer­i­can im­ports. But it is run­ning out of goods for re­tal­i­a­tion due to their lop­sided trade bal­ance.


China’s econ­omy showed signs of slip­ping even be­fore a trade war with­Wash­ing­ton.

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