Shenzhen |China’s economy grew at a weaker-than-expected 6 per cent in the third quarter asDonald Trump’s trade tariffsand weaker consumer spending had GDP coming in at the bottom end of the government’s target and a fresh 30-year low.
While still the envy of Australia and most Western economies, China’s slowing economy poses a huge challenges for the ruling Communist Party as it races to pay down debt and counter US tariffs while maintaining the stability that has been the key to its tight grip on power.
GDP was 6 per cent from July to September, down from 6.2 per cent in the second quarter and below economists’ forecasts for 6.1 per cent growth. It was the lowest rate of growth since 1992 and further evidence that Washington’s trade war is putting pressure on the world’s second-largest economy after decades of double-digit growth.
China acknowledged the “external pressures” on its economy when it released the latest economic data on Friday as it highlighted the need for reform and stable employment.
“The economy is stable for the first three quarters but we need to be aware the economic situation is complex and severe. Global economic growth is slowing and there are increasing uncertainties,” the government said.
Growth for the first three quarters was 6.2 per cent, within the government’s official target for the year of 6-6.5 per cent. However, economists outside China warn the official government data is unreliable and growth could be as low as 4 per cent.
Economists said they expected China to announce more stimulus measures to prop up the slowing economy although any measures are likely to be cautious despite huge political pressure to keep employment strong.
Mr Trump last week agreed to suspend a tariff hike on$US250 million ($368 million) of Chinese goods inexchange for a commitment by Beijing to buy up to $US50 billion in goods from American farmers hurting from the prolonged trade war. Trade talks are scheduled to resume next week
The US President said the “phase 1” deal, agreed during high-level trade talks in Washington, could be signed at a possible meeting with Chinese President Xi Jinping at the Asia Pacific Economic Co-operation (APEC) forum summit in Chile next month.
Fixed asset investment was 5.4 per cent for the first three quarters and industrial production rose 5.6 per cent. Retail sales were 8.2 per cent for the first three quarters but slowed in September to 7.8 per cent.
September exports fell 3.2 per cent from a year earlier, the biggest fall since February.
China’s manufacturing sector has been contracting. The official manufacturing purchasing managers’ index rose slightly in September to 49.8 from 49.5 in August. However, a figure below 50 points means the sector is contracting rather than expanding.
While China-watchers and economists said a more fragile economic outlook after years of double-digit growth was a challenge for President Xi, it was not an immediate threat to his grip on power.
The private sector, however, remained challenged despiteMr Xi’s pledge last year to end favouritism to powerful state-owned enterprises.