China’s Q-3 GDP Growth Lowest Since the ‘Great Recession’

China’s Q-3 GDP Growth Lowest Since the ‘Great Recession’

China’s Q-3 GDP Growth Lowest Since the ‘Great Recession’

  • An official survey confirmed that manufacturers were coming under stress.

At this week’s end, global investors and policy makers will likely be given a cold hard reminder of the costs of the US-China trade dispute, with a Reuters poll predicting that China’s Q-3 growth will slow to its weakest pace since the 2008/9global financial crisis.

Domestic demand has been faltering in recent months as US President Donald Trump’s campaign to force China to make sweeping changes to intellectual property, industrial subsidy and trade policies start to depress export earnings.

Beijing has been trying to ward off a sharper slowdown in the world’s 2nd-largest economy by stepping up policy support and softening its stance on a de-risking campaign, as the full impact of higher US trade tariffs has still to be felt.

Analysts say more support measures will be needed as risks to China’s growth outlook have increased since 2-H of the year.

A poll of 68 economists showed GDP likely grew 6.6% in July-September from a year earlier, slowing from the prior Quarter’s 6.7% and hitting the weakest pace since Q-1 of Y 2009.

The predicted Q-3 growth would still be higher than the government’s FY target of 6.5%.

“The downward pressure on the economy is relatively big as consumption weakens and infrastructure investment has yet to stabilize” from a slowdown, said Tang Jianwei, senior economist at Bank of Communications in Shanghai.

“It’s necessary to make policy adjustments as the external pressure increases.”

Recent economic data have pointed to weakening domestic demand ranging from infrastructure investment to consumer spending, as a multi-year crackdown on riskier lending and debt has pushed up companies’ borrowing costs.

Growth in China’s huge factory sector in September stalled after 15 months of expansion, with export orders falling the most in more than 2 years, according to private survey showed. An official survey confirmed that manufacturers were coming under stress.

There are signs that firms have ramped up shipments before broader and stiffer US tariffs take effect, which likely explains an unexpected acceleration in China’s exports growth in September and a record trade surplus with the United States.

The RMB Yuan CNY=CFXS has lost about 6% Vs USD this year, which have taken some sting out of the US tariffs, but could fan risks of capital outflows.

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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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