Chinese economy grows by 6% but slower than expectations

The Chinese economy has grown by 6% in the third quarter from a year before. However, this growth is said to be China’s slowest GDP gain in at least 27 years.

According to analysts, they were looking at a 6.1% growth for China’s gross national product from the third quarter of 2018.

Due to the decline, the Chinese government has been making efforts to fuel the economy. This includes taking different measures like tax cuts.

Despite the recent rate remaining within Beijing’s target range for annual growth of 6% to 6.5%, the current Chinese economic growth is its slowest in about 30 years.

Based on the data released by Beijing’s statistics bureau, in the second quarter of 2019, the Chinese economy grew by 6.2% from a year earlier. The GDP figures are said to be due to the ongoing trade war between China and the United States.

The head of economics and strategy for the Asia and Oceania Treasury Department at Mizuho Bank, Vishnu Vara said that the GDP of China has been falling since the first quarter of 2018. China gained 6.8% then as a result of its trade dispute with the United States and its credit tightening.

The slowdown in the Chinese economy is being monitored because this could affect the global economy. In the past couple of decades, China’s economic growth has been pivotal. It has managed to support growth worldwide due to its demands for various products.

Some analysts have been worried about the effects of a serious slowdown in China’s economy. This could lead to a decline in the world economy as well as increase the risk of a global recession.

While there were some optimistic results from the September data that China reported on Friday including the 7.8% increase in retail sales and the 5.8% rise in industrial output, economists are still cynical about the future growth of China’s economy.

The Chinese economy has been facing three main concerns. Apart from being embroiled in a trade war with the United States, there has also been a slowing demand at the homefront and increasing domestic issues including the outbreak of swine fever in the country.

“Despite a stronger September, pressure on economic activity should intensify in the coming months,” said senior China economist at Capital Economics, Julian Evans-Pritchard.

“Cooling global demand will continue to weigh on exports, fiscal constraints mean that infrastructure spending will wane in the near-term and the recent boom in property construction looks set to unwind,” Evans-Pritchard adds.

According to the chief China economist at TS Lombard, Bo Zhuang, China will still be experiencing a slowdown in the next two quarters. For the fourth quarter of the year, Zhuang is expecting China’s growth to be around 5.8%.

“Given the trade talks and the conflict with the U.S., Chinese authorities are accepting lower growth rate,” Zhuang states.

The Chinese economy has been facing three main concerns. Apart from being embroiled in a trade war with the United States, there has also been a slowing demand at the homefront and increasing domestic issues including the outbreak of swine fever in the country.

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