Search AP News:
Oct 21, 1:06 PM EDT

China economy grows at slowest pace in 5 years


AP Photo
AP Photo/Andy Wong
Business Video

Interactive
Made in China: Too Many Imports Too Soon?
Latest News
Lenovo wraps up purchase of Motorola phone unit

China economy grows at slowest pace in 5 years

China's growth likely to slow, research group says

Latest Business News
US stocks end a turbulent month at a record high

Malloy: UBS to stay in Connecticut through 2021

Herbalife eyes settlement in federal lawsuit

LinkedIn and GoPro are big market movers

How the Dow Jones average fared Friday

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Bank of Japan redoubles efforts to revive economy

Euro inflation creeps up, ECB still under pressure

Russia central bank in surprisingly big rate hike

Q&A: Why Japan's economy needs more juice

Puerto Rico government looks to raise tax on oil

Strengthening US growth reflects help from Fed

Yellen: Awareness of economists' diversity needed

German unemployment dips again in October

Spanish economy grows for 5th quarter in a row

Syria's 3 1/2-year conflict roiling the economy

Multimedia
Video photo gallery on trash in China
China celebrates 60th year
Panorama of Tiananmen Square
Remembering Tiananmen
A year after China quake
Migrant laborers struggle to find work
Checking Beijing's Air
China's morning exercises in parks
Exploring Chinese Cuisine
Beijing Architecture Changes For Games
Woman Rescues Homeless Quake Dogs
China Holds Funeral for Panda
China's 1-child Policy Causes Extra Pain
Map of Earthquake Zone in Central China
Entrepreneurs Move Into, Out of China
Olypmics in Beijing Highlight China's Water Woes
Foreign Buyers Head to China Despite Problems
Coal Use Produces Pollution, Illness
Coal Means Profit, Woes for China
China Extending Its Reach Around the World
In China, the Desert Closes In
Latest News
China manufacturing growth falls in October

Chinese official allegedly hides $33M in bribes

Court upholds death verdicts in slashing attack

Afghan leader makes rare reference to Taliban

Official: Man slashes 3 schoolchildren in China

Buy AP Photo Reprints
Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt
Related Stories
Seattle megachurch dissolves after founder resigns

GOP gleeful over Democrats' midterm woes in Ohio

Audio Slideshow
Panorama of Tiananmen Square
Remembering Tiananmen

BEIJING (AP) -- China's economic growth waned to a five-year low of 7.3 percent last quarter, raising concerns of a spillover effect on the global economy but falling roughly in line with Chinese leaders' plans for a controlled slowdown.

The third-quarter figures, released Tuesday, put China on course for annual growth somewhat lower than the 7.5 percent targeted by leaders, though they have indicated there is wiggle-room in their plan. The world's No. 2 economy grew 7.5 percent from a year earlier in the previous quarter and 7.4 percent in the first quarter.

Communist leaders are trying to steer China toward growth based on domestic consumption instead of over-reliance on trade and investment. But the slowdown comes with the risk of politically dangerous job losses and policymakers bolstered growth in the second quarter with mini-stimulus measures.

Employment, however, remained strong through the third quarter and the service industries such as retailing that leaders want to promote have done well this year despite the downturn, which has been focused largely in the property market, said economist Julian Evans-Pritchard of Capital Economics.

"There is still a lot of downward pressure on the economy," Evans-Pritchard said. Spending on infrastructure shored up growth in the second quarter but "once that fizzled out, the downward pressure has returned."

Investors shrugged off the news, relieved that China's growth hadn't fallen below 7 percent. The Dow Jones industrial average was up more than 140 points in early-afternoon trading Tuesday. European stocks rose, and Asian stocks were mixed.

A further slowdown in China's economy would likely cause some damage to the U.S. economy, the world's largest, as well as commodity producers such as Australia, Indonesia and Brazil that have grown accustomed to strong Chinese demand.

Mark Zandi, chief economist at Moody's Analytics, estimates that each 1 percentage point drop in China's economic growth shaves 0.2 percentage point from annual U.S. growth, which is equal to the effect of a $20-a-barrel increase in oil prices.

Still, the third-quarter figure beat expectations by many economists of about 7.2 percent, or lower, which could have increased calls for a new round of major stimulus measures that the government can ill afford after a debt fueled investment binge in response to the 2009 global recession. Asian stock markets took the data largely in stride, ending the day with unspectacular gains or losses.

"Although growth has slowed, it reflects a welcome rebalancing away from excess investment in certain sectors of the economy and is not cause for significant concern," Evans-Pritchard said in a report.

"With policymakers now prioritizing employment and economic rebalancing over growth, we don't think they will feel the need to act aggressively to shore up the economy in response to today's data," he said.

China's growth in industrial production was largely stable, with a rate of 8.5 percent year-on-year in the first three quarters, down 0.3 point from the first half, the National Bureau of Statistics reported. Investment in factories, real estate and other fixed assets rose 16.1 percent year-on-year, but real estate investment lagged at 12.5 percent growth in the first nine months of 2014 due to government controls imposed to curb a surge in housing costs.

Growth in consumer spending cooled to 11.6 percent in September, the fourth monthly decline in a row.

"Overall, the national economy remained stable and made progress and improved in quality over the first three quarters," bureau spokesman Sheng Laiyun told reporters at a news conference.

"However, the domestic and international environment remains complicated and economic development still faces many difficulties and challenges," Sheng said.

China's economic growth reached a whopping 14 percent in 2007, but took a hit from the global recession of 2008-2009 and has declined steadily since 2012.

The International Monetary Fund said in July that China should lower its growth target to no more than 7 percent for next year, but some analysts expect an even deeper decline, to as low as 6.8 percent. That would be stronger than the United States, Japan or Europe, but it would be China's weakest annual growth in two decades.

On Monday, the Conference Board, a New York-based research group, predicted that China's economic growth would decelerate to 4 percent a year between 2020 and 2025, well below the widespread expectation of 7 percent to 8 percent growth over the next decade.

So far, China has defied dire warnings it might be headed for the kind of hard landing that could send the global economy into disarray.

IHS Economics estimated that if Chinese growth unexpectedly slowed to 4.8 percent next year, it could shave a full percentage point from global growth in 2016. South Korea, Australia and Indonesia would be hardest hit, according to IHS.

---

Isolda Morillo and Christopher Bodeen in Beijing and Paul Wiseman in Washington contributed.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.