China’s growth slows, but Xi lands softly

China-Europe. Beijing’s growth is the lowest since 2009.

by Simone Pieranni
Oct. 20 2015

The Chi­nese Natio­nal Bureau of Sta­ti­stics this week relea­sed the num­bers that eve­ryone was wai­ting for. Ana­lysts were pre­dic­ting the nation’s gro­wth figu­res for the third quar­ter would be tra­gic, given the stock market’s recent trou­bles. Some may have even hoped to see the Chi­nese giant in trouble.

The figu­res con­fir­med a drop: The gro­wth rate of 6.9 per­cent was the lowest per­for­mance since 2009, when the long wave of the Euro­pean cri­sis washed over the Chi­nese economy.

At the same time the num­bers repre­sent a source of sere­nity for Bei­jing, which avoi­ded what could have been a hard lan­ding. China is still stan­ding, but for all its impressive-sounding eco­no­mic num­bers, when com­pa­red with the size of the popu­la­tion and the per­cei­ved qua­lity of life, doesn’t make the lea­der­ship look good.

Pre­si­dent Xi Jin­ping stres­sed that the moment is cer­tainly not excel­lent, but added that times are hard for all deve­lo­ping economies.

There are other signi­fi­cant inter­nal mar­ket data that sug­gest the government’s desire to foster the “Chi­nese Dream” — an eco­nomy dri­ven by con­sump­tion rather than exports — is coming to frui­tion. Accor­ding to Natio­nal Bureau of Sta­ti­stics data, retail sales of con­su­mer goods grew by 10.9 per­cent in Sep­tem­ber over the pre­vious year. That’s 10.8 per­cent more than the gro­wth in August and the highest gro­wth rate since the begin­ning of 2015.

The most impor­tant num­ber, the 6.9 per­cent gro­wth rate, was gree­ted with a sign of relief in Bei­jing: It’s not the best, but it’s still bet­ter than the worst pre­dic­tions, and they fore­cast an ove­rall rate of 7 per­cent by the end of the year.

The value of indu­strial pro­duc­tion in China increa­sed by 5.7 per­cent in Sep­tem­ber from a year ear­lier, a decrease com­pa­red to 6.1 per­cent in August. The annual gro­wth in the first three quar­ters was 6.2 per­cent, slightly lower than the 6.3 per­cent in the first eight months.

Manu­fac­tu­ring out­put increa­sed by 6.7 per­cent in Sep­tem­ber, down from 6.8 per­cent in August. The gro­wth in mining out­put slo­wed from 4 per­cent in August to 1.2 per­cent. Pro­duc­tion in the elec­tri­city, hea­ting, gas and water sec­tors increa­sed by 0.7 per­cent, less than 1.2 per­cent the pre­vious month. Ser­vi­ces also grew, giving the Party lea­ders con­fi­dence in the short-term.

With these num­bers in his poc­ket, Xi arri­ved in Lon­don yester­day and explai­ned that China is ready for a “gol­den era” in rela­tions with the Uni­ted King­dom. The warm wel­come from England drew imme­diate com­pa­ri­sons to the ici­ness of Xi’s pre­vious state visit to the Uni­ted Sta­tes, an atti­tude shift likely due to London’s break with Washing­ton in agreeing to join an invest­ment bank led by China.

The most impor­tant London-Beijing agree­ment to come out of the mee­tings is a mas­sive invest­ment in a new Bri­tish nuclear plant.

Two state-owned Chi­nese com­pa­nies would invest $25 bil­lion and take a one-third stake in a pro­ject built by France’s EDF at Hin­kley Point, in sou­th­west England. The direc­tor of EDF Energy, Vin­cent de Rivaz, descri­bed Xi’s visit as a “timely oppor­tu­nity” to close the deal.

Xi was also sche­du­led to meet today with the new Labour Party lea­der Jeremy Corbyn.