Published: Sun, October 21, 2018
Money | By Ralph Mccoy

China’s economic growth slows amid trade battle with US

China’s economic growth slows amid trade battle with US

The government said the world's second-largest economy expanded 6.5 per cent in July-September, the slowest quarterly pace in nine years.

The rate is down from 6.8 percent and 6.7 percent in the first and second quarters, respectively, but in line with a growth target of roughly 6.5 percent for the year set by China's economic policymakers.

Stock prices have also been on a downward trend since Trump started to wage a trade war in a bid to curb the huge US trade deficit with China, leaving financial market participants pessimistic about the outlook for the Chinese economy. The economy grew 6.7 per cent year-over-year until September.

"The economy continued to stay stable with good growing momentum", the Chinese National Bureau of Statistics said.

Infrastructure investment rose 3.3 percent year-on-year for Jan-Sep, slower than 4.2 percent growth in the first eight months of the year.

Retail sales, factory output and investment in factories and equipment - bigger drivers of growth than exports - all weakened in the latest quarter. This is down on expectations for a 6.6 per cent growth, and is lower than than 6.7 per cent year-over-year expansion in the previous quarter.

Since earlier this year, the governments of U.S. President Donald Trump and Chinese leader Xi Jinping have been engaged in a tit-for-tat rounds of punitive tariffs on hundreds of billions dollars of each other's imports.

The GDP reading was the weakest year-on-year quarterly growth since the first quarter of 2009 at the height of the global financial crisis.

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Despite signs of a cooling economy, Chinese officials are optimistic past growth will help Beijing survive its trade dispute with the U.S.

In the meantime, there are no signs that China and the USA are getting close to an end to the trade conflict. Forecasters say it will take the measures some time to work their way through the economy.

Construction and manufacturing were the main drags for China's slower-than-expected third-quarter economic growth, while technology offered some support, supplementary data released yesterday showed.

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

The US is also withdrawing from the Universal Postal Union, a 144-year old treaty that helps set global postal rates, over concerns that the treaty unfairly advantages Chinese exporters. The growth rate over three months that ended in September is 6.5% compared to the same period a year ago, which although impressive by any other standards, is still disappointing for China.

The Shanghai Composite has already fallen 30% in 2018, amid fears about the economy and trade war threats.

The People's Bank of China will facilitate bond financing for private companies and offer credit improvement services for those that struggle to issue bonds over the mid- to long-term, Yi said.

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