Sat, Oct 20, 2018 - Page 1 News List

Officials seek to reassure as Chinese growth drops

AP, BEIJING

Workers help dock a China Ocean Shipping Co ship yesterday in Qingdao, China.

Photo: Reuters

China yesterday reported that economic growth sank to a post-global crisis low as officials launched a media blitz to shore up confidence in its sagging stock market.

Growth in the third quarter slipped to 6.5 percent year-on-year from the previous quarter’s 6.7 percent, official data showed.

It was the slowest rate since early 2009.

The economy was already cooling before a tariff war between Beijing and the US erupted.

Beijing last year tightened controls on lending to rein in a debt boom. That has weighed on housing sales and consumer spending.

Credit controls and trade tensions are “taking a bite out of economic momentum,” PNC Financial Services Group senior economist Bill Adams said in a report.

The impact of US President Donald Trump’s penalty tariffs of up to 25 percent on Chinese goods has been limited, but with the rest of its US$12 trillion-a-year economy slowing, the leadership has reversed course and ordered banks to lend.

“Downward pressure has increased,” Chinese government spokesman Mao Shengyong (毛盛勇) told a news conference.

Officials led by Chinese Vice Premier Liu He (劉鶴) tried to reassure investors about a stock market that has sagged 30 percent since January.

The decline is “creating good investment opportunities,” Liu said in comments carried by the Xinhua news agency and business newspapers and Web sites.

“China’s current economic fundamentals are good,” People’s Bank of China Governor Yi Gang (易綱) said on its Web site.

The benchmark Shanghai Composite Index ended the day up 2.6 percent.

The government also said that insurers would be allowed to create products to help stabilize the market by reducing “liquidity risk,” referring to fears lenders that accepted stock as collateral for loans might sell, flooding the market and driving a new price collapse.

Retail sales, factory output and investment in factories and equipment all weakened in the latest quarter.

The conflict with Washington has prompted Chinese leaders to step up a marathon effort to encourage self-sustaining growth driven by domestic consumption and reduce reliance on exports and investment.

Beijing has cut tariffs, promised to lift curbs on foreign ownership of auto producers and taken other steps to rev growth, but leaders have refused to scrap plans such as “Made in China 2025,” which calls for state-led creation of Chinese champions in robotics and other technologies.

Regulators have ordered banks to step up lending, especially to entrepreneurs, who create most of China’s new jobs and wealth. Forecasters say it would take time for results to show.

Forecasters say that if all the tariff hikes China and the US have threatened are imposed, that could cut China’s growth next year by up to 0.3 percentage points.

Exports to the US rose 13 percent last month despite the tariff hikes, down slightly from August’s 13.4 percent, helping push China’s politically volatile trade surplus with the US to a record US$34.1 billion.

Exporters of clothes and other lower-value goods say that US orders began falling in April as trade tensions worsened, but makers of less price-sensitive exports such as factory equipment and medical technology are confident they can keep their market share.

“In general, the impact is limited,” Chinese Ministry of Commerce spokesman Gao Feng (高峰) said. “Governments at all levels will also take active measures to help enterprises and employees cope with possible difficulties.”

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