BEIJING: China’s economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, official data showed Friday.
The Chinese economy grew 6.0 percent in July-September, compared with 6.2 percent in the second quarter, according to the National Bureau of Statistics (NBS). The reading — in line with an AFP survey of 13 analysts — is the worst quarterly figure since 1992 but within the government’s target range of 6.0-6.5 percent for the whole year. The economy grew at 6.6 percent in 2018.
“The national economy maintained overall stability in the first three quarters,” said NBS spokesman Mao Shengyong. “However, we must be aware that given the complicated and severe economic conditions both at home and abroad, the slowing global economic growth, and increasing external instabilities and uncertainties, the economy is under mounting downward pressure.” Services and high-tech manufacturing were the key areas of growth, while employment was “generally stable”, he added.
Beijing has stepped up support for the economy with major tax and rate cuts and has scrapped foreign investment restrictions in its stock market. In its latest measure to shore up growth, the central bank said Wednesday it was pumping 200 billion yuan ( 28 billion) into the financial system through its medium-term lending facility to banks, which is designed to maintain liquidity in the market. But the efforts have not been enough to offset the blow from softening demand at home.
The trade conflict and weak domestic demand prompted the International Monetary Fund to lower its 2019 growth forecast for China from 6.2 percent to 6.1 percent on Tuesday. The long-running trade war with the US has also chipped away at the Chinese economy. This week, China reported weaker-than-expected import and export figures for September after Washington imposed new tariffs that month, triggering a tit-for-tat response from Beijing.
There were mixed signals for the economy in September. Industrial output rose 5.8 percent, from 4.4 percent in August, led by a surge in demand for solar panels and electric vehicles, according to the NBS. But fixed-asset investment slid to 5.4 percent on-year in January-September, from 5.5 percent in January-August, as the government warned against risky borrowing to build roads and bridges that could artificially pump up GDP in the short run.
China’s army of consumers were slowly starting to open their wallets again, with retail sales edging up 7.8 percent on-year in September, compared with 7.5 percent in August. A “phase one” deal announced by US President Donald Trump last Friday after he met China’s top negotiator Liu He in Washington offers a temporary reprieve from further tariff hikes.
But it did not roll back any of the stinging tariffs already imposed on hundreds of billions of dollars in trade between the economic powers, nor did it address another round of import taxes planned for December. “A limited agreement will not resolve the underlying areas of disagreement between the two sides as long-term divergence in US and China national interest remains across trade, technology, investment and geopolitics,” said Michael Taylor, a managing director for Moody’s Investors Service.
“We expect further rounds of negotiation to remain challenging, with further potential for financial markets volatility.” China’s commerce ministry spokesman Gao Feng said Thursday that its negotiators have “accelerated efforts” to hammer out the details of this mini-deal, and the two sides were aiming for an “early agreement”. Trump had said Wednesday that he hopes to sign the deal with his Chinese counterpart President Xi Jinping at the APEC summit in Chile next month.
But Gao declined to offer details on whether the text of the partial deal, or a full agreement, would be ready before the mid-November deadline. AFP