Chinas regulators rush to rally market confidence, boosting shares

Chinas regulators rush to rally market confidence, boosting shares

The latest quarterly data shows the world's second-largest economy is feeling the impact of its trade war with the biggest global market of its products.

In the third quarter of 2018, the growth in second largest economy in the world grew by 6.5% yoy.

It said the pace was in line with market expectations and higher than the government's annual growth target of around 6.5 per cent. Its fragile quarterly increase since the profundity of the global financial crisis in early 2009 is beneath economist's anticipation of 6.6%. But the slowdown has been sharper than expected, prompting Chinese leaders to reverse course and encourage banks to lend. Domestic demand turned out weaker than unexpectedly solid exports, ' said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.

Mao Shengyong, spokesman of the bureau, said the data showed that the country's economic growth remained on track but faces heavier downward pressure.

The Shanghai composite rose more 2 percent after markets reopened in afternoon trading, with information technology stocks leading the way, up more than 4 percent.

The MSCI's broadest index of Asia-Pacific shares outside Japan was 0.2 percent weaker following China's latest GDP reading.

"The 6.5 percent figure is definitely below our consensus expectations".

Much of that burst, however, came from manufacturers racing to fill holiday orders and ship out goods before the trade conflict gets worse.

Forecasters say if threatened tariff hikes by both sides are fully carried out, that could cut China's 2019 growth by up to 0.3 percentage points.

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The policy push comes as growth of outstanding total social financing, a reliable gauge of overall credit conditions, slowed to 10.6 percent in September from 10.8 percent in August.

Importantly, second quarter sequential growth was revised down from the previously reported 1.8 percent, suggesting the economy carried over less momentum into the second half than many analysts had expected. A clampdown on riskier lending has pushed up borrowing costs for companies and infrastructure investment has also slowed. No country has risen economically as fast as China, which managed to clock double-digit growth for 30 years until 2013.

With winter approaching, the Asian stock market has been rattled on consumer fears of a slowdown in economic growth, with stocks plunging to an nearly four-year low this week.

The numbers were in line with forecasts in an AFP poll but much slower than the 6.7 per cent seen in the previous three months, and were hit by the United States trade row and a deleveraging drive.

The Washington-Beijing trade fight has escalated beyond rhetoric in recent months to imposing tariffs on a wide range of each country's products, with trade penalties now on $250 billion of Chinese goods and $110 billion of US products. Mr. Liu sought to dispel worries about the impact of the simmering trade conflict with the USA on China. China's trade surplus in goods with the USA reached a record high of $34.1 billion in September.

Investors are looking to third-quarter GDP data out of China, due Friday, for indications of a slowing economy. Retail sales rose 9.2 per cent in September from a year earlier.

Faced with rising headwinds to the economy, policymakers are shifting their priorities to reducing risks to growth by gradually easing monetary and fiscal policy.

China's economy grew at 6.5 per cent in the third quarter, posting slowest growth in nine years, amid intensifying trade war with the USA and the mounting local governments debt which rose to United States dollars 2.58 trillion.

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