HONG KONG — China’s
economy grew 6.9 percent in the third quarter from a year ago, as a
deepening industrial rout and slumping stock market pushed growth to its
slowest quarterly pace since the global financial crisis of 2009.
The
weak result in the July-to-September period compares with growth of 7
percent in each of the first two quarters of the year, but was slightly
better than the 6.8 percent rate that economists had forecast. The
government’s official target for the year is growth of around 7 percent.
“China
was facing increasing downward pressure of domestic economic
development” in the first nine months of the year, the official
statistics agency said in a statement accompanying the data released
Monday morning in Beijing. Still, it added, “the overall performance of
the national economy was stable and moving in a positive direction.”
Uncertainties
over China’s decelerating growth have shaken global stock markets in
recent months as investors have raised doubts about the quality of
Chinese economic data and the transparency of the country’s policy
decision-making process. Concerns have been heightened by China’s
botched attempt to prop up its stock markets in July and the surprise
move in August to devalue its currency, the renminbi, by the most in
nearly two decades.
In
addition to prompting increased volatility on stock markets around the
world, questions over China’s development have affected global monetary
policy. Janet L. Yellen, the chairwoman of the United States Federal
Reserve, cited uncertainty over China as a reason for delaying raising interest rates after the Fed’s meeting last month.
China
is struggling with an industrial slump that in recent months has
appeared to be worse than the country’s leaders had anticipated. The
country’s traditional growth drivers — manufacturing
and housing construction — have recently become among the biggest drags
on its economy, the world’s second largest after the United States.
Data
released Monday showed continued pressure, with industrial production
rising 5.7 percent in September, near its slowest pace since the
financial crisis. Overall investment rose 10.3 percent in the first nine
months of the year, its slowest rate of increase in 15 years.
In
response, China’s central bank has cut interest rates five times since
last November, and has taken other steps to free banks to lend more. The
government has also pledged to spend hundreds of billions of dollars
this year on new infrastructure projects, including rail lines and water
treatment plants, to help lift growth.
To offset the industrial slowdown,
China is relying on a rise in
consumer demand driven through continuing
urbanization
and a growing middle class. Evidence of this emerging
economic driver can be seen in recent months in
double-digit growth
rates in areas like box office
revenues and online merchandise sales.
Overall retail
sales rose 10.9 percent in September from a year earlier,
data released Monday showed. But so far, rising spending
by Chinese
consumers has failed to offset the slump in the economy’s traditional
industrial engine.
“We
don’t really trust the overall growth figures,” said Julian
Evans-Pritchard, an economist following China at Capital Economics.
“There’s plenty of evidence to suggest the economy is growing
significantly slower than that, but that doesn’t mean that the G.D.P.
data, particularly the breakdown, doesn’t tell us anything.”
He
pointed to the rising share of services and consumption in the overall
economy, which continued to gain prominence in the third quarter despite
the slump in activity related to the stock market.
For
example, while a continued contraction in housing construction weighed
further on the industrial sector, sales of newly completed or existing
homes have been rebounding sharply — helping lift business at services
companies like property agencies.
Compared
with the April to June quarter, the third quarter “had some additional
weakness in industry, but that’s been made up by some strength in
services,” Mr. Evans-Pritchard said. “Things look to have been pretty
stable overall.”
Source: NY Times