China has reported only 6.5% growth and has been going down since two quarters that has slow downed from 6.8% and 6.7% and is putting pressure on Beijing leadership to act.
Chinese authorities are navigating through numerous challenges, as trade wars with US have sparked a blistering sell off in domestic markets and a steep decline in the value of the yuan versus the dollar, heightening worries about the growth outlook.
It marked the weakest year-on-year quarterly GDP since the first quarter of 2009 at the height of the global financial crisis.
“The trend of slowdown is strengthening despite Chinese authorities’ pledge to encourage domestic investment to support the economy. Domestic demand turned out weaker than unexpectedly solid exports,” said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.
NBS spokesman Mao Shengyong said China’s economic growth remained generally “faced with an extremely complex environment abroad and the daunting task of reform and development at home.
Nie Wen an analyst at Hwabao Trust Shanghai said “Looking ahead, the economic outlook is not optimistic with exports facing further headwinds as US tariffs kick in and demand from emerging countries ebbs. “GDP growth is likely to slow to 6.0-6.25% next year.”
“Weakness is largely coming from the secondary industry – most notably manufacturing. We may review our Q4 forecasts,” said Betty Wang, senior China economist at ANZ in Hong Kong.
Beijing and Washington have slapped tit-for-tat tariffs on each other’s goods in recent months, sparked by US President Donald Trump’s demands for sweeping changes to China’s intellectual property, industrial subsidy and trade policies.
Plans for bilateral trade talks to resolve the dispute have stalled, triggering a domestic equities rout and putting pressure on China’s already softening economy and weakening currency.
China’s exports unexpectedly kicked accelerated in September, largely as firms front-loaded shipments to dodge stiffer US duties, though analysts see pressure building in coming months.
The standoff comes as Beijing is also battling to tackle a mountain of debt, with credit tightening and falling infrastructure investment.
“We expect an adverse impact from the trade tension will appear more clearly in data after the start of new year,” SMBC Nikko Securities’ Hirayama said.
Last week the People’s Bank of China (PBOC) announced the fourth reserve requirement ratio (RRR) cut this year, stepping up moves to lower financing costs.
And more support steps look likely, analysts say, as China starts to bear the full brunt of the trade dispute with the United States.
“China is pulling on all the levers to support domestic demand in the face of this trade pressure. There’s already a big acceleration in lending underway and now the PBOC is announcing new steps,” said Ray Attrill, head of currency strategy at NAB in Sydney.
“In the end, China will do what it takes to safeguard their economy and show the US: ‘Hey, we don’t need you.'”