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China economic growth hits lowest since global financial crisis

China logged its worst performance since the global financial crisis in the third quarter, adding to fears over the health of the worldwide economy, with analysts Monday warning of further downward pressure.

business Updated: Oct 19, 2015 09:24 IST
An investor rests on a chair in front of an electronic board showing stock information at a brokerage house in Beijing.
An investor rests on a chair in front of an electronic board showing stock information at a brokerage house in Beijing.(Reuters Photo)

China logged its worst performance since the global financial crisis in the third quarter, adding to fears over the health of the worldwide economy, with analysts Monday warning of further downward pressure.

Gross domestic product (GDP) in the world’s second-largest economy grew at just 6.9%, its slowest rate in six years.

“China’s economic growth is still sluggish with many risks remaining unresolved,” ANZ Banking Group chief economist for Greater China Liu Ligang told AFP.

“We should not be over-optimistic. China’s economic growth will continue to slow down,” he said, adding he estimated GDP would expand 6.4% next year.

As the world’s biggest trader in goods and a giant market in itself, China is a key driver of the global economy, and stock exchanges around the world have been pummelled in recent weeks by concerns over its future.

Monday’s figure was the worst since the first quarter of 2009, although it was marginally above the median forecast in a poll of analysts by AFP.

It was also the first official confirmation of investors’ fears over GDP since a Chinese stock market slump over the summer followed by a surprise currency devaluation in August.

An official spokesman described third quarter growth as a “slight slowdown” but said the economy was still running within a “proper range”.

“However, we must be aware that internal and external conditions are complicated, and downward pressure for economic development still exists,” the National Bureau of Statistics (NBS) spokesman said in a statement.

China’s GDP expanded 7.3% last year, the slowest pace since 1990, and at 7.0% in each of the first two quarters of this year.

The government has set a target of “around seven percent” for 2015.

Louis Kuijs, head of Asia economics at Oxford Economics, attributed the July-September growth decline to “continued downward pressures from real estate and exports”.

“But robust consumption and infrastructure prevented a sharper slowdown, although concerns about the data will persist,” he said in a research note.

Many China watchers query the accuracy of numbers released by the government, with some suggesting they are manipulated for political reasons.

Retail sales, a key indicator of consumer spending, increased 10.9% in September, the government said, marginally ahead of expansion the previous month.

Fixed asset investment, a measure of government spending on infrastructure, expanded 10.3% on-year in the January-September period -- lower than a median projection for a 10.8% increase, according to a survey by Bloomberg News.

But industrial production -- which measures output at factories, workshops and mines -- rose just 5.7% year-on-year in September, the NBS said, well down on August’s figure and missing economists’ median estimate of 6.0%.

Analysts now widely expect Beijing to further boost fiscal spending and ease monetary policy before the end of the year to prevent a sharper slowdown in growth.

China has already cut interest rates five times in a year and reduced the amount of cash banks need to hold to boost lending, but that stimulus has yet to be seen substantially driving real economic growth.