The world’s second biggest economy has seen its slowest three months since 2009 as its manufacturing output continues to look weak

This article is more than 4 years old

This article is more than 4 years old

China’s economic growth slowed in the latest quarter to a six-year low of 6.9%, despite repeated interest rate cuts and other stimulus measures.

The figure released on Monday compared with a year-on-year expansion of 7% in the previous quarter. Although it was slightly better than economists expected, the rate was the slowest since the 6.2% recorded in the first quarter of 2009 during the global recession.

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The GDP figures were part of a swath of data released on Monday giving another snapshot of the world’s second biggest economy, which has seen stuttering growth in recent months after years of rapid expansion.

It was also the first official confirmation of investors’ fears about economic growth since a Chinese stock market slump coupled with a surprise currency devaluation in July and August.

The output of China’s huge manufacturing sector cooled more than expected to 5.7% in September, disappointing analysts who expected it to rise 6% on an annual basis after a rise of 6.1%the prior month.

Fixed-asset investment growth eased to 10.3% year-on-year in the January-September period, also missing market expectations. But retail sales rose by a better-than-forecast 10.9%.

The communist government has cut interest rates five times since last November in an effort to shore up growth, measures which have helped to ease investor fears that a downturn could trigger a worldwide slump.



Shares in Asia Pacific shares held around two-month highs after the release of the figures. Although the Nikkei in Japan was down 0.5%, the Shanghai Composite index was up 0.88% and the ASX/S&P200 was up 0.2% in Australia.

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Economists expected the Beijing government would stick to its policy of intervening to stimulate growth.

“The manufacturing industry might cause most concern as it is a pillar of China’s economy,” said Li Huiyong, an economist at Shenwan Hongyuan Securities in Shanghai.

“The central bank is very likely to cut the interest rate and reserve ratio to help the economy, maybe also reduce taxes. Some short-term stimulation is also needed, such as simplification of the stock market system to boost more medium and small enterprises.”

“We see China’s economy under downward pressure but relatively stable between 2012 and 2017, which is also a transformation period of China.”

Angus Nicholson of IG in Melbourne said the figures made it difficult for the markets to trust China’s statistics office.

“One could argue that GDP did grow at 7% in Q2 with the large contribution of financial services associated with the big rally in the stock markets [earlier in the year].

“But you would then have had to see a corresponding decrease in the Q3 number. The 6.9% Q3 GDP print really just makes one question the veracity of both the Q2 and Q3 numbers. It’s hard to be overly optimistic about the headline number, especially given the range of other data released today. Industrial production for September undershot at 5.7%, while nominal GDP came in at 6.2%.”



Louis Kuijs of Oxford Economics said: “Continued downward pressures from real estate and exports caused GDP growth to drop. But robust consumption and infrastructure prevented a sharper slowdown.”

