China’s economy at a glance – October 2019

Trade war finally shows its impact on China, as industrial sector drags Q3 growth lower.

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  • China’s economy grew by 6.0% yoy in Q3 2019 – the weakest rate of growth since 1990. The slowdown in growth was driven by China’s secondary sector – manufacturing and construction – with conditions in the former significantly weaker as a result of the US-China trade war. Given the larger than expected slowdown in growth in Q3, we are revising our near term forecasts lower. Growth for 2019 is forecast at 6.1% (from 6.25% previously), while growth in 2020 is forecast at 5.9% (compared with 6.0% previously).
  • China’s industrial production growth picked up in September – increasing by 5.8% yoy (compared with a ten year low of 4.4% yoy in August). That said, this rate of growth remains relatively modest by historical standards – highlighting the impact of both slowing domestic demand and the impact of the US-China trade war on the manufacturing sector.
  • China’s fixed asset investment growth was marginally stronger in September, increasing by 4.8% yoy (compared with 4.3% yoy in August). That said, weakness in the industrial sector has led to falling producer prices – lowering the cost of investment goods. As a result, our estimate of real investment has picked up to 6.4% yoy – a rate that is stronger than those recorded across most of 2017 and 2018, but relatively weak by longer historical standards.

For further details, please see China’s economy at a glance – October 2019.