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China's economic growth has fallen to weakest since 2009, demand ebbs as trade war bite

BEIJING (Reuters) – China's economic growth cooled to its weakest pace since the global financial crisis in the third quarter,…

BEIJING (Reuters) – China’s economic growth cooled to its weakest pace since the global financial crisis in the third quarter, increasing pressure on Beijing to increase political support as a year-long campaign to deal with debt crises and the trade war with the United States began to bite .

PHOTO PHOTO: A worker puts a nice touch on an iPal social robot designed by AvatarMind at a mounting facility in Suzhou, Jiangsu Province, China, July 4, 201

8. REUTERS / Aly Song / File Photo

The Chinese authorities are Try to navigate through many challenges, as the fears of the trade war have given a blistering selloff on domestic stock markets and a steep decline in the yuan’s value against the dollar, increasing concern over growth prospects.

The economy grew 6.5 percent in the third quarter from a year earlier, slower than 6.7 percent in the second quarter, the National Bureau of Statistics noted on Friday. Analysts polled by Reuters had expected the economy to expand 6.6 percent in July-September quarter.

GDP reading was the weakest annual quarterly trend since the first quarter of 2009 on the global financial crisis.

“The trend of slowdown is strengthening despite the promise of Chinese authorities to encourage domestic investment to support the economy. Domestic demand proved weaker than unexpected solid exports,” said Kota Hirayama, Emerging Markets Economy at SMBC Nikko Securities in Tokyo.

After another major decline in Chinese stocks on Thursday, politicians tried to calm the markets, with Governor Yi Gang saying that the recent stock market fluctuations are driven to a large extent by investors’ feelings and that securities valuations do not match economic fundamentals.

After falling more than 1 percent at the beginning of the Friday trade, the Shanghai Composite Index .SSEC was back in black after the comments.

Growth in the third quarter was dropped by the weakest factory production since February 2016 in September, as car manufacturers lowered production by more than 10 percent among sales decline.

“The figure of 6.5 percent is definitely under our consensus expectations. Weakness comes largely from the secondary industry – especially manufacturing. We can review our Q4 forecasts, says Betty Wang, senior economist at ANZ in Hong Kong.

Quarterly, growth declined to 1.6 percent from a revised 1.7 percent in the second quarter, in line with expectations of 1.6 percent growth.

Importantly, the second quarter’s sequential growth was revised down from the previously reported 1.8 percent, indicating that the economy was transferred less than in the second half of the year than many analysts had expected.

Recent economic data indicate that domestic demand has deteriorated with softness over manufacturing operations to infrastructure investment and consumption spending, as a multi-year breakdown of lending and debt risk has fueled corporate borrowing costs.

Before data mining, economists expected China’s full-year growth to reach 6.6 percent this year – convenient to meet the government’s 6.5 percent target – and 6.3 percent next year.

But after data, some say that growth can slow down even more dramatically next year.

“Future prospects are not optimistic with exports to further headwinds when US tariffs kick in and demand from emerging countries ebbs. GDP growth is likely to slow down to 6.0-6.2 percent next year, says Nie Wen, an analyst at Hwabao Trust Shanghai.

Beijing and Washington have fixed tit-to-tat tariffs on each other in recent months and plans for bilateral trade negotiations to resolve the dispute have halted, trigger a domestic shareholder and put pressure on China’s already softening economy and weakening currency.

China’s exports unexpectedly grew to higher gear in September, largely as corporate frontloaded transports to avoid stiffer US tariffs. However, stronger sales drove a record surplus with the United States that could increase the already heated conflict between the two economic superpowers.

Separate data on Friday showed China’s production output growth weakened to 5.8 percent in September from the year before. Expected expectations while fixed investment increased slightly faster than expected 5.4 percent in the first nine months of the year.

Infrastructure investment increased by 3.3 percent from January to September, which was slower than 4.2 percent in the first eight months of the year.

Retail trade rose 9.2 percent in September from the previous year, bounced after several months of poor growth.

In front of a cooling economy, stock markets and one yuan under pressure, politicians push their priorities to reduce the risks of growth by gradually reducing monetary policy and fiscal policy.

Last week China’s central government announced the fourth reserve requirement (RRR) cut this year, the movements rose to lower funding costs due to concerns about the economic drag of trade with the United States.

And more support steps are likely to look, analysts say, because China is beginning to bear the entire trade war with the United States.

“Exports have not deteriorated yet, but China’s trade is likely to decline due to China-US trade conflicts,” said Hirayama, SMBC Nikko Securities.

“We expect that a negative impact from trade tensions will appear clearer in data after the New Year’s end. “

Reporting of Kevin Yao; Further Reporting of Vatsal Srivastava in Singapore and Kaori Kaneko in Tokyo. .

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