China’s GDP growth came in below expectations in Q3, declining to +6% y/y from +6.2% in Q2. Monthly data also suggest that the slowdown of the Chinese economy is not over yet. Industrial production in September rebounded more than expected (to +5.8% y/y from +4.4%) but is below the pace of growth in H1. Fixed assets investment disappointed, slowing to +5.4% y/y YTD in September (from +5.5% in August), due to the private sector. Retail sales rebounded slightly in September, to +7.8% y/y from +7.5%, but may have been supported mainly by higher inflation. Chinese leaders seem to be comfortable with the ongoing slowdown. The policy mix is accommodative, but a fully-fledged stimulus plan seems unlikely in the near term. Illustratively, the Loan Prime Rate (LPR) updated on 21 October remained unchanged (for now), against consensus expectations of a c.5bp decline. Euler Hermes expects China’s GDP to grow by +6.2% in 2019 and +6.1% in 2020, with downside risk for next year.
