China's GDP growth slows, but still in 'proper range'

China's economy grew at a slower pace in the third quarter, expanding by 6.5 percent year on year, but is still operating within the proper range, data released by the National Bureau of Statistics showed today.

Gross domestic product rose 6.5 percent in the third quarter of 2018 from a year earlier, lower than 6.7 percent of the second quarter and the expected 6.6 percent, sitting at the lowest level since the global financial crisis in 2008.

For the period from January to September, gross domestic product posted growth of 6.7 percent year on year to 65.09 trillion yuan (US$9.39 trillion). 

“Despite the increasing uncertainties from external sources and rising downward pressure, China's economy is still operating within the reasonable range and maintained a trend of overall stability and steady progress, with the optimization and upgrading of economic structures and new momentum,” Mao Shengyong, spokesman for the statistics bureau said.

Weakness mainly came from secondary industry, a trend that is expected to extend into the fourth quarter, according to the Australia and New Zealand Banking Group.

Value-added industrial output rose 6.4 percent in the first nine months from a year earlier, but was 0.3 percentage points slower than the growth in the first half of the year.

"With the second round of US$200 billion US tariffs implemented since late September and as the front-loading effect fades, we expect China’s export growth to trend lower in the fourth quarter, further trimming its contribution to overall GDP growth," Betty Wang, senior China economist of ANZ Group said.

The mining industry posted 1.8 percent year-on-year growth in value-added output; manufacturing rose 6.7 percent; and electricity, heat, gas and water production and supply advanced by 10.3 percent.

Output of the high-technology industry, the equipment manufacturing industry and strategic emerging industries grew 11.8 percent, 8.6 percent and 8.8 percent respectively, all faster than overall industrial output growth, indicating optimization of the industrial structure with the solid progress of supply-side reform, the bureau said.

The service sector expanded 7.7 percent year on year in the first three quarters, outpacing a 3.4 percent increase in primary industry and 5.8 percent in secondary industry, indicating the continuous optimization of the economic structure.

Service sector output accounted for 53.1 percent of total GDP in the first nine months, 0.3 percentage points higher than the same period last year, and 12.7 percentage points higher than the industrial sector.

Fixed-asset investment grew 5.4 percent year on year in the first three quarters, lower than the 6 percent in the first half year, but 0.1 percentage points higher than the January-August period.

"The uptick in FAI growth is a possible sign that previous easing measures are starting to kick in," said Lu Ting, chief economist of Nomura.

Private investment picked up in the nine months, growing 8.7 percent year on year, which is 2.7 percentage points higher than the same period last year and 0.3 percentage points faster than the first half year. 

Meanwhile, fixed-asset investment in manufacturing rose 8.7 percent, up 1.9 percentage points from the first six months, showing that growth has accelerated for six consecutive months, Mao said.

In terms of increasing external uncertainties, Mao mentioned weaker momentum seen in the global economy and trade frictions between China and the United States.

Mao also highlighted improvements in employment. The surveyed unemployment rate in urban areas was 4.9 percent in September, down 0.1 percentage points from August and also 0.1 percentage points lower than September 2017.

The urban surveyed unemployment rate in 31 major cities was 4.7 percent in September, down 0.2 percentage points from a month earlier and down 0.1 percentage points from a year ago.