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Economy

China's GDP growth slowed down to 6.5% in July-September

Investment weakened as companies and cities tried to cut debt

Workers are seen at the construction site of Zhangjiakou South railway station in Hebei Province, China, on Oct. 7.
Workers are seen at the construction site of Zhangjiakou South railway station in Hebei Province, China, on Oct. 7.   © Reuters

BEIJING -- China's real gross domestic product grew 6.5% on the year for the July-September period, a slowdown from the previous quarter, the National Bureau of Statistics said on Friday.

GDP growth has now slowed for two straight quarters as investment in areas like infrastructure suffers from President Xi Jinping's campaign to reduce corporate and local government debt.

It is also the lowest rate since the January-March period of 2009, when the economy expanded just 6.4% in the wake of the financial crisis. The figure was in line with the government target of 6.5% and below the average estimate of 6.6% from a poll by Nikkei and Nikkei QUICK News.

GDP rose 1.6% on a quarter-to-quarter basis, compared with 1.7% in the April-June period. Nominal GDP, which closely traces business conditions, increased about 9.6% on the year, compared with the April-June reading of 9.8%.

Investment in fixed assets like factories and residences from January to September grew 5.4% on the year, compared with 6% for the half ended June. Infrastructure investment growth fell to 3.3% in the nine months ended September from 7.3% growth for the half.

Retail sales in physical stores and online in the nine months increased 9.3% on the year, compared with 9.4% for the half. For September alone, retail sales rose 9.2% on the year.

Individual spending, meanwhile, grew 6.3% in real terms for January to September, according to a household survey. Consumption was more robust in rural areas than cities.

January-September industrial production rose 6.4%, compared with 6.7% for the half. Production of semiconductors was brisk as the government tries to turn the field into a national industry, and power generation, which reflects overall production trends, was strong. September production increased 5.8% on the year.

Exports were firm, rising 12% on the year for the nine months on a dollar basis thanks to a soft yuan. But imports jumped 20%, reducing net exports.

U.S.-bound exports were robust as companies made shipments before additional tariffs imposed by Beijing and Washington this summer on each other's goods kicked in. Exports to the American market could start to decline in October, however.

The uncertain environment is also causing some businesses to shelve capital investments and leading consumers to exercise more caution on such big-ticket purchases as cars.

The trade war's impact is likely to spread in the October-December quarter. In addition to monetary easing, Xi continues to cut taxes and invest in infrastructure to boost the economy.

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