China's economic growth slows to lowest rate since financial crisis

Galtero Lara
Octubre 20, 2018

That missed expectations for 6.6 percent growth, according to analysts polled by Reuters.

The world's second-largest economy experienced 6.5 percent growth compared to the same quarter previous year, but was slightly behind the first two quarters of 2018, which were 6.8 percent and 6.7 percent, respectively. But the slowdown has been deeper than expected, prompting Chinese leaders to reverse course and encourage banks to lend. "Domestic demand turned out weaker than unexpectedly solid exports", said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.

The service sector gained 7.7 per cent year-on-year in the January-September period, picking up from a 7.6-per cent increase in the first half, and outpacing 3.4 per cent in primary industry and 5.8 per cent in secondary industry.

It said the pace was in line with market expectations and higher than the government's annual growth target of around 6.5 per cent. Weakness is largely coming from the secondary industry- most notably manufacturing.

Second quarter sequential growth was also revised down from the previously reported 1.8 percent.

But following the data, some say growth could slow even more dramatically next year.

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Nie Wen, an analyst at Hwabao Trust Shanghai, said "Looking ahead, the economic outlook is not optimistic with exports facing further headwinds as United States tariffs kick in and demand from emerging countries ebbs. GDP growth is likely to slow to 6.0-6.2 percent next year", said Nie Wen, an analyst at Hwabao Trust Shanghai.

Relations between the world's two largest economies have soured sharply this year, as US President Donald Trump turned to hiking tariffs to force concessions in trade negotiations with Beijing.

Growth in retail spending and investment slowed, though to still-robust rates.

China stocks have faced a turbulent year as the value of global shares bear the brunt of an escalating trade war between Beijing and the US, further being heightened by policy tightening by the US Federal Reserve.

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.

He also said the central bank will use various monetary tools, such as relending and medium-term lending facilities, to allow commercial lenders to advance more loans to private companies.

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