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China's economy posts weakest growth in six years

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October 21
9:50 AM 2015

China's economy grows at its slowest pace in more than six years in the third quarter.

Gross domestic product between July and September expanded 6.9% from a year ago, its weakest since the first quarter of 2009. While that is better than the forecasted 6.7% growth, it is lower than the 7% recorded in the first two quarters.

Analysts had expected the slowdown after the Chinese stock market declined by a third from late June. Investments linked to property and manufacturing had dropped, reflecting a shift in government focus away from those sectors into consumer spending.

The emerging services sector compensated for the weakness. It rose 8.6% in the third quarter, up from 8.4% in the first half.

The slightly lower-than-expected GDP suggests the economy has averted a sharp decline and is on track to meeting its full-year growth target of 7%.

"Today's number probably represents a floor for how bad it can get in terms of GDP growth in China. On the back of more policy easing and some cyclical recovery, we should see a rebound in the fourth quarter," Julia Wang, greater China economist at HSBC, told the Financial Times.

Stimulus measures rolled out by Beijing in the previous months are expected to be felt this quarter, although analysts still see the economy sliding gradually well into 2016.

Chinese President Xi Jinping has said they are doing their best to keep the economy growing. "We do have concerns about the Chinese economy, and we are working hard to address them," he told Reuters.

In a bid to stimulate the economy, the government has ramped up spending, particularly on infrastructure, to compensate for weakness in property and manufacturing.

The People's Bank of China has also reduced interest rates five times since November and cut bank reserve requirements thrice this year to flood the economy with cash.

More such form of intervention is expected before the end of the year.

This month, the Communist Party will hold its annual meeting where the government is expected to unveil a new five-year social and economic plan. The gathering will be watched closely for signs of more stimulus measures.

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