Economy

China Economic Growth Unexpectedly Slows to 6% in Third Quarter

China Economic Growth Unexpectedly Slows to 6% in Third Quarter”

China's economy grew just 6 per cent in third quarter, compared to previous year. Even without the drop off in exports to the US, the economy is likely to continue struggling, with deflationary pressures hitting company profits and falling imports indicating that domestic demand is weak.

It was the weakest growth since China started reporting data by quarters in 1993. Prices of soybeans, iron ore and other commodities have fallen, hitting Brazil, Australia and other suppliers.

The strength of the Chinese economy is closely watched as slowing growth can have far-reaching consequences for the global economy. But if the trade negotiations break down, U.S. Treasury Secretary Steven Mnuchin said a 15 percent tariff increase on $150 billion in Chinese goods could take effect on December 15.

The initial burst of enthusiasm faded after Beijing failed to confirm the scale of possible purchases and officials said the two sides still were working out details. "Elevated US-China tension will continue to weigh on the external outlook, despite the delay of additional US tariff imposition on a range of consumer goods".

China is battling weakened domestic spending and a prolonged trade war with the USA that has hurt Chinese exports.

It was the slowest rate of growth since the first three months of 1992, which is the earliest quarterly data available, and before the capitalist endeavor begun by Deng Xiaoping in 1979 had reached takeoff velocity.

Auto sales in China, the global industry's biggest market, are off 11.7%. But trade supports millions of jobs, and exports so far this year have fallen slightly.

China's exports to the United States, its biggest foreign market, fell 21.9 percent in September from a year ago.

As the Trump administration relentlessly upped the trade war tariffs, China took further steps in the first quarter of 2019 to stimulate its economy through government-sponsored 114.3 percent increase in fixed asset investment and slashed taxes and fees by another 2 trillion yuan ($298.3 billion).

The two economic giants have been embroiled in a trade war for more than a year, with each country applying tariffs on billions of dollars worth of goods from the other.

"As infrastructure investment is unlikely to rebound strongly, preventing a big slide in property investment will be key for authorities when they try to stabilize next year's economic growth", said Zhang Yi, chief economist at Beijing-based Zhonghai Shengrong Capital Management.

At the same time, it faces domestic challenges including a swine fever outbreak that has fuelled inflation and hit consumer spending.

Consumer prices rose 3 percent in September, the ruling Communist Party's official target for the year, as pork prices soared 69.3 percent over a year earlier.

Still, researchers say shortages are likely to last through next year while farmer rebuild their herds.



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