China Q3 GDP growth slows more than expected

A factory that produces equipment for babies and children in Jiangsu province. Recent economic data has signalled weakening domestic demand with softness across factory activity to infrastructure investment and consumer spending, as a years-long crac
A factory that produces equipment for babies and children in Jiangsu province. Recent economic data has signalled weakening domestic demand with softness across factory activity to infrastructure investment and consumer spending, as a years-long crackdown on debt has raised companies' borrowing costs.PHOTO: EPA-EFE

6.5% expansion weakest since global financial crisis, as debt crackdown weighs on growth

BEIJING/SHANGHAI • China's economy grew at a slower-than-expected pace of 6.5 per cent in the third quarter from a year earlier, marking the weakest rate since the global financial crisis, official data showed yesterday.

The data points to a modest cooling in the world's second-largest economy, as the government's multi-year efforts to tackle debt risks begin to weigh on growth and as a trade war with the United States threatens exports.

Analysts polled by Reuters had expected gross domestic product (GDP) to expand 6.6 per cent in the July-September quarter, slowing only marginally from 6.7 per cent growth in the previous quarter.

The GDP reading was the weakest year-on-year quarterly growth since the first quarter of 2009 during the global financial crisis.

Recent economic data has pointed to weakening domestic demand with softness across factory activity to infrastructure investment and consumer spending, as a years-long crackdown on riskier lending and debt has pushed up companies' borrowing costs.

On a quarterly basis, GDP in the third quarter grew 1.6 per cent, compared with growth of 1.8 per cent in April-June, the National Bureau of Statistics said.

Analysts had expected growth of 1.6 per cent on a quarterly basis.

Meanwhile, three of China's top financial officials launched a coordinated attempt to shore up confidence in the country's stock markets and economic prospects yesterday in an unusual expression of top-level concern over what one of them called "abnormal" share price falls, according to interviews with Chinese media.

"Momentum for the economy to maintain steady growth has increased," People's Bank of China governor Yi Gang was quoted as saying. "Overall, current stock market valuations are at historically low levels, which is in contrast with China's stable and improving economic fundamentals."

Markets are being pummelled by concerns over the economy, making the country's markets the world's worst performing this year, with the benchmark Shanghai Composite Index down around 30 per cent from its January peak and sitting at four-year lows.

The comments by Mr Yi as well as China Securities Regulatory Commission chairman Liu Shiyu and Banking and Insurance Regulatory Commission chief Guo Shuqing are the most concerted effort yet in a series of recent top-level statements targeting concern over the equities decline and the economy.

They were aimed at easing fears that China was swerving away from pledges of financial reform, and that private enterprises may suffer from a strengthening state hand on the economy.

REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on October 20, 2018, with the headline 'China Q3 GDP growth slows more than expected'. Print Edition | Subscribe