China’s Growth Slows, Investors Seeking Reassurances 

China’s Growth Slows, Investors Seeking Reassurances 

China’s Growth Slows, Investors Seeking Reassurances

Friday, China reported economic growth sank to a post-global crisis low as finance officials launched a media blitz to shore up confidence in its fall stock market.

Growth in the Quarter that ended in September slipped to 6.5% over a year earlier from the prior Quarter’s 6.7%, official data showed. It was the slowest rate since early Y 2009.

The world’s 2nd-largest economy already was cooling before the trade dispute between Beijing and President Donald Trump debuted.

Beijing tightened controls on lending last year to rein in a debt boom, as credit controls and trade tensions are “taking a bite out of economic momentum.

The impact of President Trump’s tariffs of up to 25% on Chinese goods in a dispute over Beijing’s technology policy has been limited. But with the rest of their $12-T-a-year economy slowing, the communist leaderships has reversed course and ordered banks to lend.

Downward pressure has increased.

Officials led by China’s economic czar, Vice Premier Liu He, Friday tried to reassure investors about a stock market that has fallen 30% since January.

The decline is “creating good investment opportunities,” Vice Premier Liu said.

“China’s current economic fundamentals are good,” the central bank’s governor, Yi Gang, said on the PBoC website.

The government also said insurers will be allowed to create products to help stabilize the market by reducing “liquidity risk.” That refers to fears lenders that accepted stock as collateral for loans might sell, flooding the market and driving a new price collapse.

Retail sales, factory output and investment in factories and equipment all weakened in the latest Quarter.

The conflict with Washington has prompted Chinese leaders to step up an effort to encourage self-sustaining growth driven by domestic consumption and reduce reliance on exports and investment.

Beijing has cut tariffs, promised to lift curbs on foreign ownership of auto producers and taken other steps to rev up growth.

China’s leaders are going forward with “Made in China 2025,” a plan that calls for state-led creation of Chinese champions in robotics and other technologies.

Chinese leaders see that as a path to prosperity and global influence.

Regulators have ordered banks to step up lending, especially to entrepreneurs who create most of China’s new jobs and wealth.

Government support is gaining traction, but more will be needed to stabilize growth.

Have a terrific week.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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