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China's Economy Hits Slowest Pace in a Decade



Sputtering growth, soaring debt and escalating trade was with the United States.

China's government on Friday reported that it grew by 6.5 percent over the three months that ended in September compared with a year ago.

China has reported growth figures over the past two years that it is gamely chugging along, despite the country's lingering problems and widespread doubts on the reliability of official numbers.

Chinese shoppers have said they are spending less or less on their purchases, like staying home instead of going out or drinking beer instead of cocktails. Wages are stagnant. Investment in splashy infrastructure projects has dropped sharply.

China's stock market is firmly in the red – it has dropped by 30 percent since a peak in January – making it one of the world's worst performing. The currency has weakened and is hovering near a 10-year low against the American dollar. Companies are complaining that they are not getting money from lenders, and that they are being able to default on their loans.

All of this is before factoring in China's intensifying trade with the United States. Friday's report on the two countries began to become an impersonal tit-for-tat tariff starting in early July.

So far it has only marginally dented China's $ 12 trillion economy. In recent weeks, Chinese officials have remained tough despite the conflict.

On Friday, officials blamed "an extremely complicated and severe international situation" for the lower-than-expected growth figures and thus sought to lift confidence with the statements of support from the central bank and market regulators.

During periods of economic slowdown, China has made large-scale infrastructure and development projects.

The exact numbers are not clear, but the experts agree that the debt load is vast. In a report this week, S & P Global estimated that China's local governments are carrying as much as $ 6 trillion in shadowy debt off the books. That is equivalent to roughly three-fifths of China's entire economic output. Analysts at the rating firm called it "at alarming level."

China has been trying to throttle back the lending, but that has hurt growth. Growth in spending on highways, rail and public facilities has dropped to a record this year. From the start of the year through the end of September, the growth in infrastructure spending fell to 3.3 percent compared to the same period last year, according to the National Bureau of Statistics.

Now, Beijing appears to be rethinking its austerity efforts. Officials are beginning to encourage new investment. To reduce the bill, they are asking for the private sector to help out. This week it announced that 1,222 infrastructure projects worth $ 362 billion.

China's expanding and increasing consumption has become an important pillar of growth as China moves away from its reliance on large investment projects.

Retail sales stayed buoyant, rising 9.2 percent in September from the previous year, as Chinese consumers continued to buy cars, appliances, smartphones and other goods. The strong numbers will help officials in Beijing to argue that the trade was left untouched.


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