BEIJING — China’s economic growth waned to a five-year low of 7.3 per cent last quarter, raising concerns of a spillover effect on the global economy but falling roughly in line with Chinese leaders’ plans for a controlled slowdown.
The third quarter figures, released Tuesday, put China on course for annual growth somewhat lower than the 7.5 per cent targeted by leaders, though they have indicated there is wiggle-room in their plan. The world’s No. 2 economy grew 7.5 per cent from a year earlier in the previous quarter and 7.4 per cent in the first quarter.
Communist leaders are trying to steer China toward growth based on domestic consumption instead of over-reliance on trade and investment. But the slowdown comes with the risk of politically dangerous job losses and policymakers bolstered growth in the second quarter with mini-stimulus measures.
Employment, however, remained strong through the third quarter and the service industries such as retailing that leaders want to promote have done well this year despite the downturn, which has been focused largely in the property market, said economist Julian Evans-Pritchard of Capital Economics.
“There is still a lot of downward pressure on the economy,” Evans-Pritchard said. Spending on infrastructure shored up growth in the second quarter but “once that fizzled out, the downward pressure has returned.”
A further slowdown in China’s economy would likely cause some damage to the U.S. economy, the world’s largest, as well as commodity producers such as Australia, Indonesia and Brazil that have grown accustomed to strong Chinese demand.
Mark Zandi, chief economist at Moody’s Analytics, estimates that each 1 percentage point drop in China’s economic growth shaves 0.2 percentage point from annual U.S. growth, which is equal to the effect of a $20-a-barrel increase in oil prices.
Still, the third-quarter figure beat expectations by many economists of about 7.2 per cent, or lower, which could have increased calls for a new round of major stimulus measures that the government can ill afford after a debt fueled investment binge in response to the 2009 global recession. Asian stock markets took the data largely in stride, ending the day with unspectacular gains or losses.