Tuesday, July 07, 2020

Quarterly GDP growth rate slowest in 27 years

Oct 19. 2019
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By Zhou Lanxu
China Daily

China's GDP growth slowed to 6.0 percent year-on-year in the third quarter, the lowest quarterly expansion in 27 years. Yet the economy is still expected to meet its annual growth target as policy support strengthens, analysts said.

Growth in the July-September period was 0.2 percentage point lower than the second quarter, as a souring world economy and escalations in the ongoing trade tension with the United States hampered demand.

GDP growth came in at 6.2 percent year-on-year in the first three quarters, within the annual target range of between 6 percent and 6.5 percent, the National Bureau of Statistics said on Friday.

Despite the slowdown, growth of China's economy during the first nine months is preliminarily estimated to be the fastest among all economies with annual GDPs over $1 trillion, said NBS spokesman Mao Shengyong.

The economy maintained overall stability in the first three quarters, but is under mounting downward pressure given the complicated and severe economic conditions at home and abroad, Mao said.

The authorities will "place stable growth and a reasonable range of economic development in a more prominent position", he said.

Monetary policy has relatively ample room to maneuver, Mao said, adding that overall price levels are still stable and pork prices will fall as supplies gradually increase.

The economy will remain stable in the fourth quarter, Mao said, citing the recovery in infrastructure investment and the slower contraction of automobile manufacturing and sales in the past two months.

"China's economic policy will still focus on stabilizing growth in the fourth quarter," said Cheng Shi, managing director and chief economist at ICBC International Holdings.

Monetary authorities are expected to step up reform efforts to reduce financing costs faced by the real economy, while fiscal policy may ramp up stimulus by not only allocating next year's special local government debt quota this year in advance, but by allowing issuance of debt in the fourth quarter, Cheng said.

Given strengthening policy support amid trade tensions, the economy may end its downward GDP growth trend in the fourth quarter and improve marginally, he added.

Negotiating teams from China and the US are busy working on the specific text of a trade deal, the Ministry of Commerce said on Thursday.

Liu Chunsheng, an associate professor at Beijing's Central University of Finance and Economics, said an agreement between the world's two largest economies would give a considerable boost to the economy.

Liu underlined the importance of better putting into place tax cut policies — the key of this year's proactive fiscal policy.

"Reforms to optimize the taxation environment, such as simplifying procedures to receive tax benefits, could help revitalize private business, thus boosting investment and employment in both the short and long run," Liu said.

The total annual tax and fee reduction amount is expected to surpass 2 trillion yuan ($282 billion), higher than planned at the beginning of the year, according to an executive meeting of the State Council, China's Cabinet, on Wednesday.

The meeting decided to carry out detailed measures to ensure a marked tax reduction on manufacturers and other important sectors, and to further clear unauthorized charges on enterprises.

Fixed-asset investment growth was 5.4 percent in the first nine months, compared with 5.5 percent in the January-August period, the NBS said. Investment in manufacturing remained weak, growing by 2.5 percent in the January-September period.

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