China’s National Bureau of Statistics reports that real on-year GDP growth was 6.7 % in the first nine months of this year and that third-quarter growth slowed to 6.5 % y-o-y. Some of the lower growth reflects the rising contribution of services to output. In the last 12 months, services accounted for 52 % of total output, while the contribution of industry and construction combined was less than 41 %, and primary production (mostly agriculture) just over 7 %.
While acknowledging the low reliability of official Chinese statistical data, even they show growth slowing. Indeed, all three of China’s most-tracked growth indicators showed on-year growth below 6.5 % in September. While real growth in retail sales fell only slightly below the 6.5 % level, industrial output growth dropped below 6 %, and real growth in fixed investment remained around zero, as it has for a long time.
The combination of the slowdown in growth, China’s debt problems and uncertainty over trade policy has made markets nervous. To calm the markets, China’s government again promised measures to improve access of privately held firms to financing and clarified regulation related to wealth management products sold by investment funds. Due to the nature and breadth of the problems, however, calming markets with such individual promises is difficult. Market disturbances are an inevitable part of China’s development. Chinese markets this week also felt pressure from global stock prices.