China’s GDP falls to 6.9% in Q3, weakest since 2009

The economy posted a 6.9-per cent growth year on year in the third quarter of 2015, lower than 7 per cent in the first half of the year, China’s National Bureau of Statistics (NBS) announced Monday.

Crude oil futures fell on Monday, after data showed China’s economy expanded at its slowest pace since 2009 in the third quarter. But a 2-percentage-point drop in property investment growth during the third quarter and the 33.8% plunge in developers’ purchase of land between January and September indicate that the outlook in the property market remains pessimistic, the report said. Similarly, fixed-asset investment rose for 10.3 percent whereas 10.8 percent growth was forecasted for the year.

China’s economic growth slowed to a 6.9 percent annual rate between August and September, which is the slowest expansion since 2009. 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.

However, the danger is that China’s consumers will struggle to fill the hole left by a rapid dwindling of investment spending growth.

“The rebalancing of the Chinese economy, away from industrial growth more towards retail growth and services growth, is not positive news for the global economy”, said Klaus Baader, chief Asia-Pacific economist at Société Générale, in Hong Kong. The communist government has cut interest rates five times since last November in an effort to shore up growth. Chinese leaders have been trying to reassure global markets that Beijing is able to manage the world’s second-largest economy after the shock devaluation in the yuan and summer stock market crash sparked fears of an economic hard landing.

The GDP growth target has already been lowered recently. That shows China’s economic structure is rapidly veering to consumption away from production, and to services from manufacturing.

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

China’s economic performance has ramifications across the world as the engine room of global growth, swallowing up commodities and churning out manufactured goods.

Li also said the government needed to move forward with financial market reforms while improving “the effectiveness of financial regulation”, to prevent and resolve financial risks.