China’s GDP growth grinds to near 30-year low as tariffs hit production

China’s third-quarter GDP growth was the slowest since the first quarter of 1992. (AP)
Updated 18 October 2019

China’s GDP growth grinds to near 30-year low as tariffs hit production

  • China’s trading partners and investors are closely watching the health of the world’s second-largest economy
  • The third-quarter GDP growth was the slowest since the first quarter of 1992

BEIJING: China’s third-quarter economic growth slowed more than expected and to its weakest pace in almost three decades as the bruising US trade war hit factory production, boosting the case for Beijing to roll out fresh support.
Gross domestic product (GDP) rose just 6.0 percent year-on-year, marking a further loss of momentum for the economy from the second quarter’s 6.2 percent growth.
China’s trading partners and investors are closely watching the health of the world’s second-largest economy as the trade war with the United States fuels fears about a global recession.
Downbeat Chinese data in recent months has highlighted weaker demand at home and abroad. Still, most analysts say the scope for aggressive stimulus is limited in an economy already saddled with piles of debt following previous easing cycles, which have sent housing prices sharply higher.
Nie Wen, a Shanghai-based economist at Hwabao Trust, pinned the worse-than-expected GDP growth mainly to weakness in export-related industries, especially the manufacturing sector.
“Given exports are unlikely to stage a comeback and a possible slowdown in the property sector, the downward pressure on China’s economy is likely to continue, with fourth-quarter economic growth expected to slip to 5.9 percent,” Nie said.
“Authorities will loosen policies, but in a more restrained way.”
The third-quarter GDP growth was the slowest since the first quarter of 1992, the earliest quarterly data on record, and missed forecasts for 6.1 percent growth in a Reuters poll of analysts. It was also at the bottom end of the government’s full-year target range of 6.0 percent-6.5 percent.
In a briefing after the GDP data release, Mao Shengyong, a spokesman for China’s statistics bureau, announced Beijing’s plans to bring forward some 2020 special local government bond issuance to this year, in a move to spur regional infrastructure investment.
Even recent signs of breakthrough in the protracted trade war between Beijing and Washington are unlikely to change the economic outlook any time soon.
US President Donald Trump said last week the two sides had reached agreement on the first phase of a deal and suspended a tariff hike, but officials warn much work still needed to be done.
A slide in China’s exports accelerated in September while imports contracted for a fifth straight month.
The drags on demand, both domestic and global, have hit several key parts of the economy with weakness seen in freight shipments, factory power generation, employment and entertainment spending. In September, factory gate prices fell at their fastest pace in three years.
Mao from the statistics bureau said there was ample room to change monetary policy, as rising consumer inflation has been mainly driven by volatile food prices.
The International Monetary Fund has warned the US-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, but said output would rebound if their dueling tariffs were removed.
Beijing has relied on a combination of fiscal stimulus and monetary easing to weather the current slowdown, including trillions of yuan in tax cuts and local government bonds to fund infrastructure projects and efforts to spur bank lending.
But the economy has been slow to respond with business confidence shaky and local governments facing increasing strains as tax cuts hit revenues, weighing on investment.
In contrast to the disappointing headline GDP number, China’s industrial output grew a better-than-expected 5.8 percent in September, faster than the 17-year-low posted in August.
The uptick was in line with signs of increased domestic orders, though overall demand remains at historically weak levels. Analysts had expected industrial output to grow 5.0 percent in September.
September’s industrial production was also in line with recent business surveys that noted new domestic orders in food processing, textiles and electrical machinery, although growth in other products such as cement, crude steel and cars slowed further.
Hwabao Trust’s Nie does not expect stronger manufacturing to last given slowing global demand, which would suggest a pick up in broader economic growth remains unlikely.
Fixed asset investment grew 5.4 percent from January-September, matching expectations, but slowing from the 5.5 percent in the first eight months.
Private sector fixed-asset investment, accounting for 60 percent of the country’s total investment, grew 4.7 percent in January-September, down from 4.9 percent in January-August.
Retail sales rose 7.8 percent year-on-year last month, in line with expectations, and faster than 7.5 percent in August.


Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

Updated 01 June 2020

Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

LONDON: Arab News has published the recording of an interview with a Nissan lawyer after he denied saying that a bailout of Lebanon by the International Monetary Fund (IMF) was linked to the extradition of fugitive tycoon Carlos Ghosn.

The former Nissan chairman fled to Beirut in December from Japan, where he faced charges of financial wrongdoing.

In a story published in Arab News Japan on Saturday, Sakher El Hachem, Nissan’s legal representative in Lebanon, said the multibillion-dollar IMF bailout was contingent on Ghosn being handed back to Japan. 

The lawyer said IMF support for Lebanon required Japan’s agreement. Lebanese officials had told him: “Japan will assist Lebanon if Ghosn gets extradited,” the lawyer said

“For Japan to agree on that they want the Lebanese authorities to extradite Ghosn, otherwise they won’t provide Lebanon with financial assistance. Japan is one of the IMF’s major contributors … if Japan vetoes Lebanon then the IMF won’t give Lebanon money, except after deporting Ghosn.”

On Sunday, El Hachem denied making the comments. “The only thing I told the newspaper was that there should have been a court hearing on April 30 in Lebanon, but it was postponed because of the pandemic,” he said. In response, Arab News published the recording of the interview, in which he can be clearly heard making the statements attributed to him. 

Japan issued an arrest warrant after Ghosn, 66, escaped house arrest and fled the country.

Now listen to the recording: