China’s economy grew by 6.0 percent in the third quarter of this year, the lowest quarterly growth rate in 27 years. Analysts say that the contracted Chinese market, the biggest destination of South Korea’s exports and direct investment, is likely to shake the foundation for South Korea’s economic growth.
China’s National Bureau of Statistics said Friday that the country’s gross domestic product (GDP) for the July-September quarter recorded around 24. 687 trillion yuan (about 4,119 trillion won), a 6.0 increase from a year ago. This marks the slowest quarterly growth since records began in 1992 and is a 0.1 percentage point lower than analysts’ earlier expectations. Since logging 7.0 percent in the second quarter of 2015, the growth of the world’s second largest economy has slowed down to around 6 percent for the following four years. Many speculate that the growth rate in the fourth quarter of 2019 will drop further to a range of 5 percent given this year’s growth trends.
The economic slowdown of the world’s most populous nation in the latest quarter is attributed to weakening demands for exports and domestic consumption due to its protracted trade war with the United States and the breakout of African swine fever (ASF). Affected by the trade spat with Washington, Beijing’s exports in September fell by 3.2 percent from a year earlier. In addition, the country’s producer price index (PPI) has declined for three consecutive months, sparking concern about a possible emergence of deflation. The consumer price also rose by three percent last month, with the price of pork soaring by 70 percent as a result of ASF reports. This further discouraged consumption, making a dent in the growth rate. “The (Chinese) government has sought to use tax cuts and a flood of new infrastructure projects to power through the slowdown. The data for the first nine months of the year show that some of those efforts are falling short,” the Financial Times said.
Analysts express concern that the South Korean economy would be dealt a blow from the slowing Chinese economy, as the two countries are closely linked to each other in terms of the manufacturing and finance industries. Private research institutes including the Korea Economic Research Institute analyzed that a 1 percent point decline in China’s growth would bring down the growth of South Korea by 0.5 percentage point. “If the slowdown of the global economy is protracted and the Chinese government’s stimulus policies fail to work, the Chinese economy may continue to shrink next year, negatively affecting the South Korean economy,” said Joo Won, deputy director of Economic Research Department at the Hyundai Research Institute.
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