China's GDP growth hits weakest level in 30 years, serving grim notice to world economy

Gross domestic product expanded 6 percent in the July-September period from a year ago, data showed on Friday

China's economy expands 6.7% in Q3, as Govt spending offsets weak exports
An employee works inside a chemical factory in Urumqi, Xinjiang Uighur Autonomous Region, China, October 18, 2016. Picture taken October 18, 2016. REUTERS

China's economic growth slowed more than expected in the third-quarter, signalling trouble for the global economy that's teetering on the brink of another recession after the 2009 meltdown. The growth of the Chinese economy was at the weakest pace in almost three decades, hit by the trade war with the US.

Gross domestic product expanded 6 percent in the July-September period from a year ago, data showed on Friday. This is the slowest growth rate since the first quarter of 1992. Economists had expected the world's second largest economy to grow at 6.1 percent in the third quarter.

A drying up of investment and weaker demand at home and abroad in the backdrop of the bruising trade war with the US sent the economy to a tailspin. Analysts said the downward pressure on the Chinese economy is likely to continue.

"Given exports are unlikely to stage a comeback and a possible slowdown in the property sector, the downward pressure on China's economy is likely to continue, with fourth-quarter economic growth expected to slip to 5.9% ... Authorities will loosen policies, but in a more restrained way," Shanghai-based economist at Hwabao Trust Nie Wen told Reuters.

Announces measures to boost the economy

After the GDP data was announced, Chinese authorities said immediate moves to boost economic activity will be undertaken. Beijing will initiate special local government bond issuance immediately, in order to spur regional infrastructure investment, Mao Shengyong, a spokesman for China's statistics bureau, said.

In a bad sign for the economy, which is known as the 'world's factory', the fall in exports accelerated in September. The Chinese report card is a sign that global economic growth will remain stymied as long as the US-China trade war rages on. The International Monetary Fund said the trade war will lead to a substantial cut in 2019 global growth.

"China's economy is grappling with both external and internal headwinds ... Exports started to contract of late amid wobbly global demand and rising tariffs in the U.S. Despite some stabilization in retail sales and industrial production in September, overall demand continues to soften, reflecting still relatively tight credit conditions," Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong, told Bloomberg.