Business

China reports lowest quarterly growth in 26 years

China's economic growth decelerated to a 26-year low in the latest quarter amid a tariff war with Washington, adding to a deepening slump that is weighing on global growth.

While the trade war with the U.S. has made a huge dent, domestic consumer spending is also down

A worker passes by goods piled up at a warehouse in Nanjing in east China's Jiangsu province in June. China's economic growth slowed to its lowest level in decades amid a tariff war with Washington. (Chinapix via The Associated Press)

China's economic growth decelerated to a 26-year low in the latest quarter amid a tariff war with Washington, adding to a deepening slump that is weighing on global growth.

The world's second-largest economy expanded by six per cent in the three months ended in September, down from the previous quarter's 6.2 per cent, data showed Friday, the lowest rate since China started reporting data by quarters in 1993.

The slump increases pressure on Chinese leaders to avert politically dangerous job losses as they fight a tariff war with U.S. President Donald Trump over Beijing's trade surplus and technology ambitions.

"Pressure on economic activity should intensify in the coming months," said Julian Evans-Pritchard of Capital Economics in a report.

The slowdown in China, the world's biggest trader, has global repercussions. It is depressing demand for industrial components from Asian countries and prices of soybeans, iron ore and other commodities, hitting Brazil, Australia and other suppliers.

The International Monetary Fund cited the U.S.-Chinese tariff war as a factor in this week's decision to cut its 2019 global growth forecast to three per cent from its previous outlook of 3.2 per cent.

Trump agreed last week to delay a tariff hike on Chinese goods and said Beijing promised to buy up to $50 billion of American farm goods. Officials say the two sides still are working out details.

22% drop in exports to U.S.

Beijing has yet to confirm the scale of possible purchases of U.S. goods. It is unclear whether Chinese leaders want more steps including possibly lifting punitive tariffs already in place before purchases go ahead.

An even bigger impact on Chinese growth appears to come from cooling domestic activity including consumer spending and investment.

Retail sales growth declined to 8.2 per cent over a year earlier in the first three quarters of 2019, down from the first half's 8.4 per cent, the National Bureau of Statistics reported.

Chinese leaders are in a marathon campaign to nurture growth based on domestic consumption and reduce reliance on trade and investment. But those plans call for maintaining the level of exports that support millions of jobs.

Factory output growth slowed to 5.6 per cent in the January-September period, down from six per cent in the first six months of the year.

China's exports to the United States, its biggest foreign market, fell 21.9 per cent in September from a year ago. That helped to drag down overall Chinese exports by 1.4 per cent. Imports of American goods sank 15.7 per cent.

The latest economic growth figure was the lowest since China began reporting data by quarters in 1993. Annual growth tumbled to 3.9 per cent in 1990 but rebounded to 9.3 per cent the following year.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.