“As growth slows and risk of deflation heightens, we reiterate that China needs to cut reserve requirement ratio by another 50 basis points in the fourth quarter”, economists at ANZ Bank said in a note to clients.
Advertisement
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.
Reports that were released on Monday showed that government spending in China surged almost 27% in September compared to one year ago.
Retail sales of consumer goods grew 10.9 percent year on year in September, slightly higher than 10.8 percent for August, NBS data showed.
China’s GDP expanded 7.3% in 2014, the weakest since 1990, and at 7% in each of the first two quarters of 2015.
China affects the world more than ever, with Federal Reserve chair Janet Yellen last month citing concern about the world’s second-largest economy among reasons for holding off from raising interest rates.
Hartmut Issel, Singapore-based chief investment officer for UBS AG’s wealth management unit said “Chinese growth numbers are coming down – that trend will not stop”. Chinese tourists and students annually spend as much as $10 billion in Korea.
Asian shares ended little changed today (October 19th) – after a choppy session – following the release of fresh Chinese economic data which reassured investors that the government stimulus was having a positive impact. Industrial output grew 5.7 per cent last month, the lowest growth in six months, according to the statistics bureau. Further out a deceleration looms, with China’s leaders poised to lower their growth target for the next five years, according to economists surveyed by Bloomberg News.
NBS spokesman Sheng Laiyun blamed a weak recovery in the world economy and expectations of a United States interest rate rise for China’s woes, as well as domestic overcapacity in industries ranging from steel to concrete.
The central bank was forced to intervene in the forex market to stabilize the yuan’s exchange rates, while trying at the same time to stem capital outflows through open market operations and other monetary measures, the paper said.
Advertisement
A few analysts said the true growth rate was likely to be exaggerated by official figures and has persistently languished below 4% all year, only being kept near the 7% government target by pressure from Beijing.
