Beijing economy won’t pack the same punch

Here’s the good news out of China: While third-quarter economic growth decelerated to its slowest since 2009, it was still faster than anticipated, thanks to a resilient services sector and buoyant consumer spending.

It could have been worse for the world’s second-biggest economy, especially after this summer’s stock - market rout, which followed a surprise devaluation of the yuan on August 11.

GDP rose 6.9% in the three months through September, from a year earlier, beating economists’ estimates for 6.8%.

The data showed that Xi Jinping’s government is transforming the $10tn economy from one driven by debt-fuelled investment and exports into a more sustainable one led by consumer spending and services.

The not-so-great news: Policy-makers and investors hoping a resurgent China will revert back to its role as global growth turbocharger are set to be disappointed.

“The rebalancing of the Chinese economy, away from industrial growth more towards retail growth and services growth, is not positive news for the global economy,” said Klaus Baader, chief Asia-Pacific economist at Société Générale, in Hong Kong.

As the world’s biggest exporter, China devours raw materials to make everything from steel tubes to plastic toys, but its service and consumer-goods sectors import less.

That means a services-driven economy will add less juice to the world. That’s bad news for Australia, Brazil, and Mongolia.

However, China’s new economy will throw up opportunity for trade partners as retail spending grows and services play a bigger role. One example: Starbucks want to double the number of stores in the country by 2019.

Bloomberg