China’s GDP growth slows to six per cent in third quarter

BEIJING (AFP) – China’s economy expanded at its slowest rate in nearly three decades during the third quarter, held back by cooling domestic demand and a protracted United States (US) trade war, according to an AFP survey of analysts.

Gross domestic product (GDP) figures due tomorrow are expected to show that the Chinese economy expanded six per cent in July-September, from 6.2 per cent in the second quarter, the poll of 13 economists predicted.

The reading would mark the worst quarterly figure since 1992 but be within the government’s target range of 6.0-6.5 per cent for the whole year. The economy grew at 6.6 per cent in 2018. Beijing has stepped up support for the economy with major tax and rate cuts and has scrapped foreign investment restrictions in its stock market.

But the efforts have not been enough to offset the blow from softening demand at home. The trade conflict and weak domestic demand prompted the International Monetary Fund (IMF) to lower its 2019 growth forecast for China from 6.2 per cent to 6.1 per cent on Tuesday. The long-running trade war with the US has also chipped away at the Chinese economy. The Asian powerhouse reported this week weaker-than-expected import and export figures for September after Washington imposed new tariffs that month, triggering a tit-for-tat response from Beijing.

“Trade conflict with the US remains a wild card,” said Tommy Wu from Oxford analytics.

“Elevated US-China tension will continue to weigh on the external outlook, despite the delay of additional US tariff imposition on a range of consumer goods… And we think that a US-China trade deal remains unlikely anytime soon.”

A partial US-China deal announced by US President Donald Trump last week offers a temporary reprieve from further tariff hikes.

But this initial agreement – which included increasing US farm product purchases, and protections for intellectual property – will take weeks to finalise and does not tackle thornier issues such as Chinese subsidies to state firms. Tariffs already in place on hundreds of billions of dollars in two-way trade will also remain.

A man takes photos in the central business district in Beijing. PHOTO: AFP