This article is more than 1 year old

This article is more than 1 year old

Chinese officials have reacted quickly to a sharp slowdown in growth at the world’s second largest economy, promising that it remained strong despite an escalating trade war with the US.

The intervention on Friday by the vice-premier, Liu He, and the central bank governor gave China’s leading stock market a brief respite from six months of tumbling shares that have sliced more than a third from the value of Shanghai-listed companies.

Growth in the three months to the end of September slipped to 6.5% from 6.7% in the previous quarter, official data showed, to mark the slowest rate of quarterly GDP growth since early 2009.

Much of the blame for the slowdown was heaped on Beijing’s credit controls, which had restricted lending and investment, especially in heavy industries.

Beijing tightened controls on lending last year to rein in a debt boom. That has weighed on housing sales and consumer spending. Car buyers are steering clear of dealerships.

Credit controls and trade tensions were “taking a bite out of economic momentum”, said Bill Adams, a senior economist at PNC Financial Services Group, in a report.

China’s economy was already before a tariff war between Beijing and Donald Trump erupted.

European and US companies have seen orders fall, especially in the car sector, which has also faced severe falls in demand as customers turn away from diesel vehicles.

Shares in the tyre maker Michelin tumbled more than 5% on Friday after it warned sales would worsen in the fourth quarter following weaker Chinese vehicle demand and new emissions standards that have hit European registrations.

Official Chinese figures, which are much criticised for inflating China’s real rate of growth, showed trade continued to play a positive role in boosting GDP growth, suggesting foreign orders for Chinese goods had surged ahead of tariffs being put in place.

Analysts said this meant the impact of trade barriers had been delayed and once the full impact was felt could drag China’s growth down further in subsequent quarters.

Diana Choyleva, a director of the consultancy Enodo Economics and a China expert, said Chinese officials were wary of the US president and of antagonising him any further.

She said the trade war with the US, which has seen Washington impose extra tariffs on more than $200bn of goods, would help push down the value of the yuan by 15-20% against the dollar, offsetting the impact of Trump’s policies.

“Beijing now understands that America is serious about containing China’s rise, especially in technology, and at this stage would not want to risk giving Trump an excuse to turn tougher faster,” she said.

Facebook Twitter Pinterest Official figures suggest that foreign orders for Chinese goods had surged ahead of US tariffs being put in place. Photograph: VCG/VCG via Getty Images

The impact of Trump’s penalty tariffs of up to 25% on Chinese goods in a dispute over Beijing’s technology policy has been limited. But with the rest of its $12tn a year economy slowing, the communist leadership has reversed course and ordered banks to lend.

“Downward pressure has increased,” a government spokesman said.

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Chinese officials led by Liu helped push up the benchmark Shanghai Composite Index by 2.6% with claims that low-valued companies provided a buying opportunity.

The decline is creating good investment opportunities, Liu said in comments carried by the official Xinhua News Agency.

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

The Chinese government also said insurers would be allowed to create products to help stabilise the market by reducing “liquidity risk”. The plan refers to fears that banks and shadow banks, which have accepted stock as collateral for loans, might sell and flood the market, driving a stock market collapse.

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As well as retaliating against some US tariffs, Beijing has cut them in other areas, promised to lift curbs on foreign ownership of car producers and taken other steps to boost growth.

But leaders have refused to scrap plans such as Made in China 2025, which calls for the state-led creation of Chinese champions in robotics and other technologies, which the US says breaks international trade rules.