China Q3 GDP Growth Weakest Since Global Financial Crisis


The Chinese economy advanced 6.5 percent year-on-year in the September quarter of 2018, after a 6.7 percent growth in the previous period and missing market consensus of 6.6 percent. It was the lowest growth rate since the first quarter of 2009 during global financial crisis, amid intense tariff dispute with the US and alarming off-balance-sheet borrowings by local governments.

For the first three quarters of the year, China's economy expanded 6.7 percent compared to the same period 2017, amid continued efforts to deleverage debt and contain financial risks. Recently, S&P Global Ratings said off-balance-sheet debt by Chinese local governments could now be as high as CNY 40 trillion (USD 7.95 trillion), representing a “debt iceberg with titanic credit risks”. The value added of the primary industry was up by 3.4 percent; the secondary industry by 5.8 percent; and the tertiary industry by 7.7 percent.

Industrial production rose 5.8 percent year-on-year in September of 2018, after a 6.1 percent gain in the previous month and below market estimates of 6 percent. It was the weakest reading since February 2016, mainly due to a slowdown in manufacturing output (5.7 percent vs 6.1 percent in August). Meanwhile, production growth accelerated for: mining (2.2 percent vs 2 percent) and electricity, gas and water (11 percent vs 9.9 percent). Across industries, production went up at a softer rate for: food processing industry (4.5 percent vs 6 percent); automobile (0.7 percent vs 1.9 percent); and computer, communications (12.6 percent vs 17.1 percent), while output growth was steady for non-metallic mineral products (at 5.2 percent). At the same time, production grew further for: chemicals (5 percent vs 4.8 percent); ferrous metal smelting (10.1 percent vs 9.8 percent);and machinery (5.2 percent vs 3.3 percent). Considering the first nine months 2018, industrial output increased 6.4 percent.

Retail sales increased 9.2 percent from a year earlier in September 2018, following a 9 percent rise in the previous month and beating market expectations of 9 percent. It marked the fastest growth in retail trade since April, as sales growth accelerated for: garments (9 percent vs 7 percent in August); personal care (17.4 percent vs 15.8 percent); home appliances (5.7 percent vs 4.8 percent); furniture (9.9 percent vs 9.5 percent); and building materials (8.4 percent vs 7.9 percent). In addition, sales of telecoms picked up (16.9 percent vs 6.4 percent). Meanwhile, sales of cosmetics (7.7 percent vs 7.8 percent); jewelry (11.6 percent vs 14.1 percent); office supplies (4.9 percent vs 5.4 percent); and oil, oil products (19.2 percent vs 19.6 percent) went up at softer paces; while those of automobiles continued to fall (-7.1 percent vs -3.2 percent). From January to September, retail sales grew 9.3 percent. Retail sales in rural areas increased 10.4 percent, continuing to outpace the growth in urban regions, where sales rose 9.1 percent.

China's fixed-asset investment rose 5.4 percent year-on-year in January to September 2018, after a 5.3 percent rise in previous period and slightly above expectations of 5.3 percent. Fixed-asset investment increased a bit faster for public investment (1.2 percent vs 1.1 percent in January-August) while private investment grew 8.7 percent, the same as in the prior period. By sector, FAI grew for: agriculture (9.8 percent vs 12.1 percent); manufacturing (8.7 percent vs 7.5 percent); mining (6.2 percent vs 5.9 percent); transport, storage (3.2 percent vs 3.1 percent); water, enviromental and public facilities (3.4 percent vs 2.2 percent); health (8.3 percent vs 10 percent); and culture, sports (19.3 percent vs 18.7), while fell for electricity & utilities (-10.7 percent vs -11.4 percent).

Figures released earlier showed exports increased 14.5 percent year-on-year to USD 226.69 billion in September 2018, while imports grew 14.3 percent to USD 195 billion. The nine-month period trade surplus with the US was reported at USD 225.79 billion, up 15 percent from the same period of the previous year.

For 2018, the Chinese government targets growth at around 6.5 percent, the same as in 2017.


China Q3 GDP Growth Weakest Since Global Financial Crisis


National Bureau of Statistics l Rida | rida@tradingeconomics.com
10/19/2018 7:33:07 AM