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Chinese growth slows to near 30-year low as trade war bites

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A worker checks a can of beer at a beer factory in Hangzhou in China's eastern Zhejiang province on October 18, 2019. - China's economy expanded at its slowest rate in nearly three decades in the third quarter, hit by cooling domestic demand and a protracted US trade war, official data showed on October 18. (Photo by STR / AFP) / China OUT (Photo by STR/AFP via Getty Images)

The Chinese economy slowed to its weakest pace in almost 30 years in the third quarter, official figures have shown, as the ongoing trade war with the US weighs on the the country’s economy and global demand.

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GDP rose by six per cent year on year, a historically low level by Chinese standards. Economists had been expecting a rise of 6.1 per cent after 6.2 per cent growth in the second quarter, which was already seen as poor.

The slowdown in growth will lend support to those in the Chinese leadership and internal and external investors calling for a fresh stimulus package to boost the world’s second largest economy.

Julian Evans-Pritchard, senior China economist at Capital Economics, warned that “pressure on economic activity should intensify in the coming months”.

“Cooling global demand will continue to weigh on exports, fiscal constraints mean that infrastructure spending will wane in the near-term and the recent boom in property construction looks set to unwind.”

Industrial production picked up in September, however, growing at 5.8 per cent year on year. This was above economists’ predictions of five per cent growth and up from August’s growth of 4.4 per cent.

Nonetheless, industrial production still weakened in the third quarter due to the effects of high US tariffs and weaker global demand as the international economy slows.

The industrial downturn was coupled by one in construction and took the quarterly growth rate to its lowest since records began in 1992.

Hao Zhou, an analyst at Commerzbank, said: “There emerges a risk that the fourth-quarter GDP growth could dip below the psychological level of six per cent.”

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He said the data “suggests that the softening momentum has been intensifying, and as the Chinese authorities remain restrained in policy easing, further weakness remains the baseline scenario in our view”.

(Image credit: Getty)