China’s economic growth dipped below 7% for the first time since the global financial crisis, figures showed yesterday, hurt partly by cooling investment, raising pressure on Beijing to further cut interest rates and take other measures to stoke activity.
The world’s second-largest economy grew 6.9% between July and September from a year ago, the National Bureau of Statistics said, slightly better than forecasts of a 6.8% rise but down from 7% in the previous three months.
That hardened expectations that China would avoid an abrupt fall-off in growth, with analysts predicting a more gradual slide in activity stretching into 2016.
“Underlying conditions are subdued but stable,” said Julian Evans-Pritchard, an analyst at Capital Economics in Singapore.
“Stronger fiscal spending and more rapid credit growth will limit the downside risks to growth over the coming quarters.”
Chinese leaders have been trying to reassure global markets for months that the economy is under control after a shock devaluation of the yuan and a stock market plunge fanned fears of a hard landing.
Some analysts were hopeful that the third-quarter cooldown could mark the low point for 2015 as a burst of stimulus measures rolled out by Beijing comes into force in coming months, but muted monthly data for September kept optimism in check.
In its battle against China’s worst economic cooldown in more than six years, the central bank has cut interest rates five times since November and reduced banks’ reserve requirement ratios three times this year.
Despite the spate of easing, Monday’s GDP reading was still the worst since the first quarter of 2009, when growth tumbled to 6.2%.
While Chinese officials put a brave face on economic woes, describing the slowdown as “reasonable”, senior leaders have voiced worries.
President Xi Jinping said last weekend that the government has concerns about the economy and was working hard to address them.
“The overall pressure on the Chinese economy is still huge,” said Zhou Hao, a senior economist at Commerzbank in Singapore, who expects government will lower the annual growth target in its next five-year plan at the end of this month.
To shore up growth, the government has quickened spending on infrastructure and eased curbs on the ailing property sector. The latter have helped revive weak home sales and prices but have not yet reversed a sharp decline in new construction.
Data released on Monday showed China’s government spending surged almost 27% in September from a year ago. Some market watchers believe current growth is much weaker than government figures, though officials deny allegations that numbers are inflated.
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