China's economic growth slows to 6.5% amid trade battle

Marco Green
October 19, 2018

China's economy grew at a slower quarterly pace than expected, expanding 6.5 per cent in the three months ended September, as the country's trade war with the United States exacted a toll on exporters and manufacturers.

NBS spokesman Mao Shengyong said China's economic growth remained generally "faced with an extremely complex environment overseas and the daunting task of reform and development at home".

The world's second largest economy expanded 6.5% in the quarter July to September from a year earlier, according to the National Bureau of Statistics, representing the worst performance since the start of 2009.

Forecasters expected China's economy to cool after Beijing tightened credit controls to rein in a debt boom.

And while exports to the United States have held up so far, trade frictions have sapped confidence.

The measures have also affected financial confidence, as Shanghai's stock market has fallen by about a quarter in 2018, and the yuan has declined by about 9 percent against the U.S. dollar.

In response, three of China's top financial officials, including the head of the central People's Bank of China, made a concerted effort on Friday morning to reassure investors and to stem the market sell-off that one of them called "abnormal".

Third-quarter expansion of fixed-asset investment, a traditional engine of growth, fell to 5.4 per cent in the January-September period, up slightly from 5.3 per cent in the January-August period, data showed.

Spending appears to be bottoming out thanks to the recent step up in local government borrowing, said Julian Evans-Pritchard of Capital Economics.

China's growth continues to slow.

Before the latest growth figures, economists had expected China's full-year growth to come in at 6.6% this year and and 6.3% next year.

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.

Chinese leaders have expressed confidence that their $12 trillion-a-year (€10.5 billion-a-year) economy will escape trade tensions with US President Donald Trump unscathed.

Washington has hit roughly half of Chinese imports worth about $250 while Beijing has responded in kind. "The structure and the productivity of the economy have continued to improve".

Other reports by Click Lancashire

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