China's GDP growth increases to almost 30 years as production tariffs hit production

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BEIJING (Reuters) – The economic growth of China's third quarter increased more than expected and at its weakest pace in almost thirty years as pressure on trade yields in World War One, and accelerated Beijing support t fresh implementation.

People enjoy a beach near a port during sunrise in Qinhuangdao, Hebei province, China October 15, 2019. REUTERS / Stringer

Gross domestic product (GDP) rose by just 6.0% year-on-year, indicating that the economy was growing more than 6.2% in the second quarter.

China's trading partners and investors are closely monitoring the world's second largest economy as the trade war with the United States fears a global recession.

Asian stocks were hit after the data, reversing the gains made on the UK and the European Union by hitting Brexit's deal for a long time.

With China's data in recent years, attention has been paid to weaker demand at home and abroad. However, the majority of analysts say that the scope for aggressive incentives is limited in an already adversely affected economy with debt cairns after previous mitigation cycles, which have significantly increased housing prices.

Nie Wen, an Shanghai-based economist at the Hwabao Trust, put GDP growth worse than expected ahead of a weakness in export-related industries, particularly in the manufacturing sector.

“As exports are unlikely to cause significant disruption and the property sector may be slowed down, the pressure on the Chinese economy is likely to continue, with fourth quarter economic growth expected to grow to 5.9%. , ”Said Nie.

“The policy authorities will release, but more restrictively.”

The third quarter GDP growth was the slowest since the first quarter of 1992, the earliest recorded quarterly data, and lost forecasts for 6.1% growth in Reuters polls analysts. It was also at the bottom of the target range of 6.0% -6.5% for the full year.

In an information session after the release of GDP data, Mao Shengyong, spokesman for Chinese statistics bureau, announced Beijing's plans to bring forward a number of 2020 local government bonds this year, towards encouraging regional infrastructure investment.

The economic outlook is unlikely to change at any time, even recently, in the long-term trade war between Beijing and Washington.

President U. Donald Trump said last week that both sides had reached agreement on the first stage of dealing and were suspending a tariff, but officials warned of much work still to be done .

A slide in Chinese exports was accelerated in September and imports entered into a contract for a fifth straight month.

There are many central parts of the economy that attract demand, both domestic and global, and weakness in freight shipments, factory power generation, employment and entertainment expenditure. In September, the factory's gate prices fell at a fastest speed in three years.

Mao from the statistics bureau said there was plenty of room to change monetary policy, due to increased consumer inflation being driven primarily by food volatility prices.

The International Monetary Fund has warned that the U-China trade war will reduce the 2019 global growth to the slower pace of the 2008-2009 financial crisis, but said the output would come back if their tariffs were to be deducted.

Beijing is dependent on a combination of fiscal stimulus and monetary mitigation to alleviate the current slowdown, including trillion yuan in tax cuts and local government bonds to finance infrastructure projects and efforts to encourage bank loans.

But the economy is slow to respond to business confidence and there is greater pressure on local governments as income tax cuts hit, attracting investment.

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In contrast to the disappointing GDP headline, China's industrial output grew 5.8% better than expected in September, faster than the minimum 17 years published in August.

The victory was in line with the signs of the increased domestic orders, although overall demand remains at historically weak levels. Analysts were expected to grow industrial output by 5.0% in September.

September's industrial production also coincided with recent business surveys which noted new home orders in food processing, textiles and electrical machinery, although growth in other products such as cement, raw steel and cars slowed.

Nie does not expect the Hwabao Trust to see a stronger end of global demand, suggesting that wider economic growth is unlikely to continue.

Fixed asset investment increased by 5.4% from January-September, in line with expectations, but slowing from 5.5% in the first eight months.

Private sector fixed asset investment grew by 4.7%, representing 60% of the country's total investment, in January-September, down from 4.9% in January-August.

Retail sales rose 7.8% year on year last month, in line with expectations, and faster than 7.5% in August.

Slideshow (3 Image)

In another positive sign, China's property investment remained buoyant in September, contributing to an increase in new construction activity.

However, property transactions during peak season slowed China's “From September” highlights for the sale of new houses, the authorities' ongoing crackdown on opinion was injured, indicating that there were many signs of deterioration.

“Because infrastructure investment is unlikely to change strongly, preventing a major slide in property investment will be crucial to the authorities when they seek to stabilize next year's economic growth,” said Zhang Yi, main economist at Zhonghai Shengrong-Beijing.

Reporting by Kevin Yao and Gabriel Crossley; Additional reporting by Yawen Chen; Writing with Stella Qiu and Ryan Woo; Edited by Sam Holmes

Our Standards:The principles of Thomson Reuters Trust.

. Asia / Pacific (t) Major Annexes (t) Monetary / Fiscal Policy / Policy Makers (t) US Government News (t) Real Estate Markets (t) Economic News (Third Party) (t) Emerging Market Countries Ahead

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