China's economy: growth in the third quarter misses expectations

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Media Lookup China's economic slowdown explained

China's economy grew at a slower pace than expected in the third quarter as it struggled with a US-led trade war and softer domestic demand.

In the three months to September, the economy expanded 6% from the previous year, official figures showed.

The result fell only below the expectations of 6.1[ads1]% growth for the period.

The decline comes despite the government's efforts to support the economy, including measures such as tax cuts.

The latest figures mark a further acceleration of momentum in the world's second largest economy, which had already seen growth slow down at its slowest pace in around three decades.

The rate remained within the government's target range for annual growth of between 6% and 6.5%.

The strength of the Chinese economy is closely followed, as slowing growth can have far-reaching consequences for the global economy.

The country has become a key engine for growth in recent decades. The healthy demand for a variety of products, from goods to machines, has supported growth worldwide.

Some analysts worry that a sharp decline in China could hurt an already weak global economy and increase the risk of a recession.

Julian Evans-Pritchard, senior China economist at Capital Economics, said that pressure on the Chinese economy "should intensify over the coming months".

He said that more intervention by policy makers to support the economy was likely "but it will take time before this puts a floor under economic growth".

What challenges does China face?

China has been fighting a trade war with the United States over the past year, which has created uncertainty for businesses and consumers.

At the same time, it is facing domestic challenges, including an outbreak of swine fever which has driven inflation and hit consumer spending.

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China accounted for 16% of global gross domestic product in 2018, according to the McKinsey Global Institute

This week, the International Monetary Fund trimmed its growth forecast for China to China to 6.1% from 6.2% due to the protracted trade conflict and slowing domestic demand.

But there have been some signs of progress toward resolving the trade dispute, with the US and China reaching a "phase one deal" earlier this month.

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The government has sought to help the economy through tax cuts and by taking measures to increase the liquidity of the financial system.

Still, some analysts say the government has become more cautious in providing stimulus amid growing concern for China's rising debt pile.

Any analysis of China's economic data must come with a caveat: Many economists believe the actual figures are much lower than what we are told, but it is the path of government growth and signaling that you should take into account.

The fact that growth figures have fallen below market expectations indicates that China's economy is hurting more than many thought.

There were signs from China that these numbers would be worrying. Earlier this week, Premier Li Keqiang made the unusual move to warn local officials that they must do "everything" to ensure they meet growth targets for this year.

China's economy is hit on three fronts: the US-led trade war, slowing domestic demand and rising domestic challenges, including the outbreak of swine fever that has caused a huge blow to pig farmers. It has also pushed down prices on consumers.

China's decline is nothing new. But these challenges create new headaches for decision makers trying to control the downturn. The country's political stability depends on financial security – and it is the municipalities that have delivered the last forty years. They are under pressure to keep that contract.

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