BEIJING: China’s economy expanded at its slowest rate in nearly three decades during the third quarter as it was hit by the long-running US trade war and cooling domestic demand, data showed Friday, with an official warning of “mounting downward pressure”.
With China a key driver of global growth, the soft reading added to concerns about the world economy and prompted speculation that authorities will unveil fresh stimulus following a series of other measures in recent months.
Gross domestic product expanded six per cent in July-September, from 6.2pc in the second quarter, according to the National Bureau of Statistics (NBS).
The reading is the worst quarterly figure since 1992 but within the government’s target range of 6.0-6.5pc for the whole year. The economy grew 6.6pc in 2018.
While NBS Spokesman Mao Shengyong said the economy was showing stability, he warned that, “we must be aware that given the complicated and severe economic conditions both at home and abroad, the slowing global economic growth, and increasing external instabilities and uncertainties, the economy is under mounting downward pressure.”
Services and high-tech manufacturing were the key areas of growth, while employment was “generally stable”, he added.
Beijing has stepped up support for the economy with major tax cuts and measures making it easier for banks to increase lending, including a reduction for cash they must keep in reserve.
In addition, on Wednesday the central People’s Bank of China said it would pump 200 billion yuan ($28bn) into the financial system through its medium-term lending facility to banks, to maintain liquidity.
However, the efforts have not been enough to offset the blow from softening demand at home, which highlights the struggle leaders have in their drive to recalibrate the economy from one driven by exports and investment to one built on consumer spending.
The trade conflict and weak domestic demand prompted the International Monetary Fund to lower its 2019 growth forecast for China to 6.1pc from 6.2pc on Tuesday.
This week, Beijing posted weaker-than-expected import and export figures for September, after Washington imposed new tariffs in their long-running trade war.
On Friday, data showed industrial output rose 5.8pc, from 4.4pc in August, led by a surge in demand for solar panels and electric vehicles, according to the NBS.
However, fixed-asset investment slid to 5.4pc on-year in January-September, from 5.5pc in January-August, as the government warned against risky borrowing to build roads and bridges that could artificially pump up GDP in the short run.
China’s army of consumers were starting to open their wallets again, with retail sales edging up 7.8pc on-year in September, compared with 7.5pc in August.
Figures last week showed activity in the crucial manufacturing sector continued to contract last month because of the trade spat.
The readings show an economy that is “struggling to generate demand on a domestic level”, said Michael Hewson, an analyst at CMC Markets UK.
Infrastructure spending — a major pillar of growth — is also expected to decline as China tries to rein in toxic debt, said Julian Evans-Pritchard of Capital Economics, the recent boom in property development is also “set to unwind,” he added.