15 July 2019
China's factory output has weakened, putting pressure on the broader economy. Photo: Bloomberg
China's factory output has weakened, putting pressure on the broader economy. Photo: Bloomberg

China GDP growth slows to weakest pace since Q1 2009

China’s economy grew 6.5 percent in the third quarter from a year earlier, falling short of market expectations and marking the weakest pace since the global financial crisis, data showed on Friday.

On a quarterly basis, growth slowed to 1.6 percent from a revised 1.7 percent in the second quarter, Reuters reports, citing figures released by China’s National Bureau of Statistics.

Analysts had expected year-on-year GDP growth for the July-September quarter to come in at 6.6 percent, after a 6.7 percent expansion in the three months to June.

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

Importantly, second quarter sequential growth was revised down from the previously reported 1.8 percent, suggesting the economy carried over less momentum into the second half than many analysts had expected, the report noted.

Recent economic data have pointed to weakening domestic demand with softness across factory activity, infrastructure investment and consumer spending.

Separate data on Friday showed China’s factory output growth weakened to 5.8 percent in September from a year earlier, missing expectations.

The factory output reading was the weakest since February 2016.

In other data, retail sales rose 9.2 percent in September from a year earlier.

Faced with a cooling economy, stock market wobbles and a yuan currency under pressure, policymakers are shifting their priorities to reducing risks to growth by gradually easing monetary and fiscal policy.

Last week China’s central bank announced the fourth reserve requirement ratio cut this year, stepping up moves to lower financing costs amid concerns over the economic drag from a trade dispute with the United States.

Beijing and Washington have slapped tit-for-tat tariffs on each other in recent months, putting pressure on China’s already softening economy and weakening currency.

Acknowledging these risks, central bank governor Yi Gang said on Sunday that he still sees plenty of room for adjustment in interest rates and the level of cash banks must hold as reserves.

But Yi also said the country’s economic growth would still comfortably reach its full-year target of around 6.5 percent with the possibility of overshooting.

Economists expect China’s full-year growth to come in at 6.6 percent this year — comfortably meeting the government’s target — and 6.3 percent next year.

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