China experiences lowest economic growth since GFC

By @Shayani92 on
Investors look at computer screens showing stock information at a brokerage in Shanghai, China, August 13, 2015.
Investors look at computer screens showing stock information at a brokerage in Shanghai, China, August 13, 2015. Reuters/Aly Song

China recorded a 7 percent plunge in its economic growth on Monday - its lowest since the global financial crisis. Slower investment and existing pressure on Beijing to cut interest rates were some of the major factors contributing to this downturn.

China recorded a growth of only 6.9 percent from July to September over the period of one year. Its National Bureau of Statistics (NBS) mentioned that this fall was slightly better than forecasts of a 6.8 percent rise. It reported that the recovery of an already weak economy was slow as China was facing increasing downward pressure on domestic economic development.

Based on a preliminary estimation by NBS, the gross domestic product (GDP) of China was 48,777.4 billion yuan (AU$10539.51 billion). However, Julian Evans-Pritchard, an analyst at Capital Economics in Singapore, said that the current conditions were still stable. "Stronger fiscal spending and more rapid credit growth will limit the downside risks to growth over the coming quarters," he said, reported Reuters .

While Chinese officials described the slowdown as being "reasonable,” senior leaders have expressed their worries. In an interview with Reuters, President Xi Jinping said that the government was working to address the problems affecting the Chinese economy at large.

Factory output saw a growth of 5.7 percent, below the reserve of a 6 percent rise. Similarly, fixed-asset investment rose by 10.3 percent while 10.8 percent growth was forecasted for the year.

Retail spending and agricultural production showed a good momentum. While the total output of summer grain was up by 3.3 percent, retail spending touched an annual growth rate of 10.9 percent, crossing the forecasts of 10.8 percent. "The overall downturn pressure on the Chinese economy is still huge," said Zhou Hao, a senior economist at Commerzbank in Singapore.

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