Chinese authorities to release third quarter economic growth data on Friday

The first estimate of Chinese economic growth for the three months to September will be released today, likely confirming forecasts that economic output slowed to 6.1%, the slowest pace in almost three decades.

Primary factors for the downtrend include ongoing trade tensions with the US, weakening global demand and alarming levels of borrowing by local governments.

To limit the effects of the current slowdown, Beijing has been relying on tax cuts, pledges to lend to small companies, and orders to municipal governments to fund infrastructure construction. While analysts say more stimulus is needed to ward off a sharper slowdown, Beijing has opted against further measures, limited by worries of rising debt and a potential housing bubble.

The lack of a fiscal response now puts the burden on the People’s Bank of China to continue monetary easing—the PBOC has already cut rates seven times since early 2018. Those cuts, however, will likely fail to revive the economy without fiscal measures from the government. Despite a first phase trade deal between the US and China, the slower pace of growth for China’s economy is unlikely to change, with economists expecting a further slowdown to 5.5% in 2020.

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