China's GDP growth slows to 6% in 3rd quarter

Daniel Fowler
October 19, 2019

China's development slumped to six per cent within the third quarter of 2019, its lowest degree in nearly three a long time, because the world's second largest financial system struggled to beat the influence of a bruising commerce conflict with the United States and sluggish home demand, in accordance with official knowledge launched on Friday.

Downbeat Chinese data in recent months has highlighted weaker demand at home and overseas.

The third-quarter performance was also at the bottom end of the government's full-year growth target of 6 per cent to 6.5 per cent.

Unveiling the data, Mao Shengyong, spokesman for the National Bureau of Statistics, said the country was "faced with mounting risks and challenges both at home and abroad".

Any analysis of China's economic data has to come with a caveat: Many economists believe the actual figures are much lower than what we are told, but it's the trajectory of growth and signalling from the government that you should pay attention to.

"China's economy has been slowing for years now, so it's a managed slowdown", Global X ETFs head of research and strategy Jay Jacobs said on Yahoo Finance's "The First Trade".

More than one million hogs have been culled in the past 12 months, according to official reports.

Dollar pinned near one-month lows on weak data; pound volatile
Movement in the Euro was also driven largely by Brexit sentiment, with the shared currency fluctuating throughout the session. China's yuan weakened slightly to 7.0990 per dollar, while the safe-haven Swiss franc rose 0.1% to 0.9936 per dollar.

That said, ask any trader five years ago if 6% GDP growth from an emerging market such as China would be completely ignored, and the answer would be "hell no". In September, factory gate prices (cost of a product excluding transportation or delivery cost) fell at their fastest pace in three years. With a drop off in exports to the USA expected to continue as the trade war hits, the economy is likely to continue struggling as deflationary pressures hit company profits.

China held its annual consumer price index (CPI) inflation to just 2.5 percent for the first 8 months of 2019.

The uptick was in line with some tentative signs of increased domestic orders in the summer, though overall demand remains at historically weak levels. But growth in property transactions slowed during what is traditionally China's "Golden September" peak season for new home sales, hurt by persistent pressures in the sector as a crackdown on speculators showed little signs of abating. The economy grew at 6.6 percent in 2018.

The weak data raise the likelihood of interest rate cuts and other stimulus to shore up growth and avert politically unsafe job losses.

Fixed-asset investment grew 5.4 percent from January-September, matching expectations, but slowing from the 5.5 percent in the first eight months. Household loans, mostly mortgages, rose to 755 billion yuan (S$146 billion) last month from 653.8 billion yuan in August, central bank data showed.

China's slowdown is nothing new.

Manufacturing output rose 5.9 percent year on year, and output growth of the mining sector rose 4.6 percent.

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