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China's growth slumped to a record low last quarter — and it could drop even lower next year, the IMF warns

Yusuf Khan , Business Insider US
 Oct 21, 2019, 03:06 PM
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  • China's economy expanded 6% between July and September, its slowest rate of growth on record.
  • The IMF said it could slow even further due to trade tensions and political uncertainty.
  • Tao Zhang, the International Monetary Fund's deputy managing director, warned growth could fall to 5.8% next year in an interview with CNBC.
  • For more stories go to www.BusinessInsider.co.za.

China's economy expanded 6% between July and September, its slowest rate of growth on record, and the IMF has warned it could slow even further.

Tao Zhang, the International Monetary Fund's deputy managing director, warned in an interview with CNBC that growth could slow to "5.8%, or any number in that neighbourhood, I think is reasonable."

China's growth has slowed over the last few years as it has restructured its economy to make it more sustainable, but now trade tensions are weighing on growth, Zhang told CNBC.

"We have trade tensions, we have other geopolitical forces, we have all these uncertainties around the world," Zhang said. "These add further downside pressures to the Chinese economy."

"You won't expect any of the economies, whatever the size, to grow continuously at 10% or 7% or 8%," he added. "We are talking about growth with better quality, higher sustainability."

However, Zhang said China's 6% growth was still one of the highest growth rates in the world, and even if it slowed to 5.8% that would be within a "reasonable range."

Despite the growth headwinds, Chinese policymakers are not looking to stimulate the economy much in the future, Bloomberg reported. Instead, their main focus is on keeping the nation's large debt pile under control, Yi Gang, the governor of the People's Bank of China, said.

Yao Wei, chief China economist at Societe Generale, told Bloomberg this was because China was playing the long game with its economic strategy.

"They measure the policy scope by looking at the overall debt, by looking at how much risk there is in shadow banking, in the housing sector and in inflation," Yao said. "Looking at all these things, they judge they actually don't have much scope from a long-term perspective. So they're very careful about how to use it and when to use it."

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