This is the first time the quarterly growth rate had dropped under 7 per cent since the second quarter of 2009.
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China’s economy expanded quicker than economists forecast in the third quarter as the services sector offset weaker manufacturing, keeping Premier Li Keqiang’s 2015 growth target within reach.
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 pummeled in July-September by concerns over its future. The communist government has cut interest rates five times since November in an effort to shore up growth.
China’s economy decelerated in the most recent quarter but stronger spending by consumers, who are emerging as an important pillar of growth, helped to avert a deeper downturn.
Retail spending alone bucked the trend, growing at an annual rate of 10.9 per cent, slightly better than forecasts for 10.8 per cent growth.
“But equally, there is no denying the wider point that China is not about to let the economy slide into 6.0-6.5 percent growth territory, with adverse and visible impact on jobs”.
“We don’t really trust the overall growth figures”, said Julian Evans-Pritchard, an economist following China at Capital Economics. “But robust consumption and infrastructure prevented a sharper slowdown”.
Critics pointed out the figure was suspiciously close to the 7 per cent target set by Beijing. This slow growth was due to a slowdown in industrial commodities and falling export orders.
In the first three quarters, the value added of the tertiary industry accounted for 51.4 percent of GDP, up 2.3 percentage points from the same period previous year, official data show.
And industrial production – which measures output at factories, workshops and mines – rose just 5.7 percent year-on-year in September, the NBS said, well down on August’s figure and missing economists’ median estimate of 6.0 percent.
They are also forecasting further cuts in interest rates as Beijing tries to stimulate a faltering economy.
Chirathep Senivongs Na Ayudhya, spokesman of the Bank of Thailand, said the slight slip in China’s supply-side GDP growth from 7 per cent in the second quarter to 6.9 per cent in the third quarter was as expected by the central bank. A few market watchers believe current growth is much weaker than government readings, though officials deny allegations that the numbers are inflated.
U.S. crude was up 1.86% at $47.26 a barrel and Brent closed was up 0.04% to $48.73 a barrel at the end of 18 October (Sunday).
Europe’s main stock markets closed mixed Monday on Chinese stimulus hopes following news that China’s economy grew in the third quarter at its slowest pace for six years.
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“Many countries devaluated their currencies, putting more pressure on Chinese exports, one of the three pillars of China’s economic growth”, said Sheng at a press conference.
