China’s GDP Growth Falls Below 7% For The First Time Since 2009

China affects the world more than ever, with Federal Reserve chair Janet Yellen last month citing concern about the world’s second-largest economy among reasons for holding off from raising interest rates. Net exports trimmed 1.8 per cent from the GDP in the first nine months of this year, Sheng Laiyun said.

Investors have been trying to gauge when the Fed will raise interest rates for the first time in almost a decade after recent economic reports offered a mixed picture of the US economic growth. This figure was slightly better than analyst forecasts of a 6.8% rise, but was still down from the 7% growth seen in the previous three months.

“The growth outlook remains subdued”, Louis Kuijs, head of Asia economics at Oxford Economics Ltd in Hong Kong, wrote in a note before the data release.

Many expected a sharper slowdown in the third quarter given the stock market collapse – dubbed the Great Fall of China – and the devaluation of the country’s currency. Thanks to the move toward a “new normal”, China’s services sector showed 8.4 percent growth compared to a meager 6 percent growth for the manufacturing sector. While growth in the Chinese economy continues to moderate investors owe thanks to policymakers in Beijing and the PBOC for improving liquidity conditions and their continued effort to bolster capital markets.

In its fight against China’s worst economic slowdown since 2008, the central bank has reduced its reserve requirement ratio (RRR) more than three times in 2015.

“Looming deflation risk suggests that the People’s Bank of China will also adjust the benchmark interest rates, especially lending rate, down further”.

“China, probably five or six years from now, will be growing at 5 or 6 percent, not 7”, said Huang.

Despite weak exports and imports, factory overcapacity and a cooling property market, Beijing reported annual economic growth of 7.0 per cent in the first two quarters, in line with its full-year target. The top economic official, Premier Li Keqiang, said in September that he would accept growth below that level so long as the economy keeps creating enough new jobs.

The data led Asian markets to retreat while China stocks ended flat on profit-taking after initial gains.

The official adds that China will speed up the development and innovation and build on the service sector to maintain growth.

E-commerce, restaurants and other services for China’s consumers account for 41.7 percent of the country’s employment, well ahead of manufacturing’s 34.7 percent share, according to government data.

September’s figures dampened optimism that the low point had been reached.