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China's growth weakens further to

6.0% in third quarter - Nikkei Asian
Review
CK TAN, Nikkei staff writer
3-4 minutes

SHANGHAI -- China's growth rate slowed further to a record

low of 6.0% for the July-September quarter as added U.S.
tariffs punished the economy, according to preliminary figures
released by the National Bureau of Statistics on Friday.

The previous quarter's 6.2% growth had been China's slowest

since 1992, when the country first began reporting quarterly
growth data. The figure is lower than the 6.1% median
forecast from 20 economists polled by Nikkei and Nikkei Quick
News last week.

But the bureau was cautiously optimistic for the future, saying
recent data on manufacturing and infrastructure investment
were "favorable" to growth on top of a relative low base in the
final quarter of last year.

"I feel the economy is guaranteed to remain stable in the

fourth quarter," said Mao Shengyong, a bureau spokesperson.

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The government has projected an increase of gross domestic

product between 6% and 6.5% for the year.

The ongoing trade war with the U.S. again hampered the
economy. During the quarter, exports contracted 0.4% as the
U.S. on Sept. 1 began imposing an additional 15% tariff on
$110 billion worth of consumer goods. Imports declined 6.5%.

The tariff followed a 25% levy on some $250 billion worth of

goods, including toys, that Washington began imposing last
year. Shipments of toys and sports equipment fell 0.6% in the
first half of this year. In the year-earlier period, they grew 13%.

"We hope the trade war will be gone in one or two years," said
Julian van Gemeren, vice chairman of Micro Mobility. The
Swiss company, which produces scooters and bags in China
before shipping them around the world, operates in sectors
that have been negatively affected by the trade war.

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Beijing and Washington recently reached a "phase 1" deal to

avert a further escalation of tensions, but the absence of a
comprehensive solution as well as global uncertainty are still
clouding China's economic outlook.

As for domestic pressures, rising inflation and weaker

consumer spending are weighing on growth. An outbreak of
African swine flu has been a key culprit, greatly increasing the
price of pork, a staple meat in China. The situation has been
pushing up the consumer price index, which rose 3% in
September, the highest since November 2013. In August, the
index increased 2.8%.

During the first three quarters, lower spending on vehicles and

jewelry weighed on retail sales, which grew 8.2%, down from
the 9.3% recorded over the same period last year.

Analysts say the government's macro stimulus policies, which

include allowing financial institutions to trim the reserves they
must keep on hand, were inadequate.

"We are cautious about the outlook for investment growth,

since China's property developers are facing tighter
restrictions on fundraising, dampening investment activity,"
said Zhu Chaoping of J.P. Morgan Asset Management.

Zhu added that investors will be looking for signs of further

stimulus after a key meeting of China's Communist Party at
the end of the month.

Oxford Economics also predicts in a note that the growth will

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"moderate further in [the fourth quarter] and into 2020 amid

soft domestic demand and a gloomy external environment."

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