China’s downturn threatens global growth

published 25 October 2019

Miao Girl Festival in China © Jie Zhao/Corbis via Getty Images — China's latest growth figures do not paint such a bright picture

China's latest growth figures were "dire", says Freya Beamish of Pantheon Macroeconomics. Official data shows that growth in the world's second-largest economy slowed to 6% year-on-year in the third quarter of 2019. The Shanghai Composite index fell by more than 1% on the news, report Martin Strydom and Gurpreet Narwan in The Times. Western markets also retreated.

The limits of stimulus

China's headline growth numbers are "heavily massaged", says Nathaniel Taplin for The Wall Street Journal. Many economists think that the real figures are much lower. Yet this disappointing data still reflects "genuine weakness". Authorities will also be aware that with local food and accommodation prices surging any overeager stimulus risks unleashing an inflationary shock. Although trade tensions with Washington have eased in recent weeks we are still a long way from a deal that rolls back US tariffs that have already been announced on $550bn-worth of Chinese goods. "All that makes a pretty shaky foundation for 2020."

Year-end euphoria?

This year has been "peppered with nasty surprises for investors", says Michael Mackenzie in the Financial Times. Defensive portfolios are all the rage among asset managers. Yet with sentiment so gloomy, even mildly positive news on US-China trade could spark a surprise year-end case of "deal euphoria" in markets. Investors should stay tuned.