China's economic growth slows to 6.9% in July-September quarter

19 October 2015

China's economy, the world's second-largest, grew 6.9 per cent between July and September 2015, its weakest quarterly economic growth since the global financial crisis, raising pressure on policymakers to roll out measures to support growth and avert a sharper slowdown.

The 6.9-per cent growth in July-September estimated by the National Bureau of Statistics, is, however, slightly better than forecasts of a 6.8 per cent, adding credence to the expectations that China would avoid an abrupt fall in growth, and would see a more gradual slide in activity stretching into 2016.

Even as China's economic growth dipped below 7 per cent, hurt partly by cooling investment, Chinese leaders have been trying to reassure jittery global markets that the economy is under control.

Amidst a stock market plunge in the summer that fanned fears of a hard landing of the economy and a shock devaluation of the yuan thereafter, the Chinese economy continues to show signs of weakening.

"Underlying conditions are subdued but stable," said Julian Evans-Pritchard, an analyst at Capital Economics in Singapore. "Stronger fiscal spending and more rapid credit growth will limit the downside risks to growth over the coming quarters."

"Looming deflation risk suggests that the People's Bank of China will also adjust the benchmark interest rates, especially lending rate, down further."

In its battle against China's worst economic cooldown in more than six years, the central bank has cut interest rates five times since November and reduced banks' reserve requirement ratios three times this year.

Despite the spate of easing, Monday's GDP reading was still the worst since the first quarter of 2009, when growth tumbled to 6.2 per cent.

Industrial production in China rose 5.7 per cent in September from a year ago while fixed-asset investment (FAI) climbed 10.3 per cent in the first nine months, below estimates of 10.8 per cent.

September retail spending alone bucked the trend, growing at an annual rate of 10.9 per cent, slightly beating forecasts for 10.8 per cent.

China's consumer inflation cooled more than expected in September, while producer prices extended their slide to a 43rd straight month, highlighting the urgency for the central bank to tackle deflationary pressures.

To shore up growth, the government has quickened spending on infrastructure and eased curbs on the ailing property sector. The latter have helped revive weak home sales and prices but have not yet reversed a sharp decline in new construction.

Data released separately on Monday showed China's government spending surged almost 27 per cent in September from a year ago.

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