Economic growth in China is at a near-30-year low in the third quarter as tariffs start to negatively affect factory production, Reuters reported on Thursday (Oct. 17).
The slowdown was worse than anticipated — gross domestic product (GDP) growth was the slowest it’s been since 1992, with the GDP increasing only 6.0 percent year-on-year.
“Given exports are unlikely to stage a comeback and a possible slowdown in the property sector, the downward pressure on China’s economy is likely to continue, with fourth-quarter economic growth expected to slip to 5.9%,” Nie Wen, a Shanghai-based economist at Hwabao Trust, told Reuters. “Authorities will loosen policies, but in a more restrained way.”
In an attempt to encourage regional investment, Mao Shengyong, a spokesman for China’s statistics bureau, told Reuters that Beijing could decide to issue bonds this year instead of waiting until 2020.
He also said the monetary policy could be adjusted to stabilize food price fluctuations, a major cause of inflation.
The trade war could cause the global economy to stall to its lowest point since the 2008 financial crisis, according to the International Monetary Fund, which has warned the U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, but said output would rebound if their dueling tariffs were removed.
Domestic and global demand has slowed down in freight shipments, factory power generation, employment and entertainment spending, Reuters said.
China’s second-quarter economic data showed a 6.2 percent growth; however, economists and investors believe the numbers are worse than what is being officially released.
China’s reported data came in close to Beijing’s target, a figure that has been published quarterly for the past 4.5 years. But a multinational index of Chinese production indicates a much smaller growth coupled with fewer workers returning to their jobs.
In a move intended to boost business as the trade war continues, China flooded banks with billions of dollars in September after The People’s Bank of China lowered how much was required to be kept in reserve.