China launches full-throated bid to boost confidence in stocks

China launches full-throated bid to boost confidence in stocks

The world's second largest economy expanded by 6.5 per cent in the July-to-September period year-on-year, according to official GDP figures released Friday by China's National Bureau of Statistics. But with the rest of their $12 trillion-a-year economy slowing, the communist leaderships has reversed course and ordered banks to lend. Domestic demand turned out weaker than unexpectedly solid exports, ' said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo. "Economic fundamentals are good", the central bank governor, Yi Gang, said.

Although the United States economy and Wall Street markets remain healthy, there are warnings the troubles in China - where the yuan is heading to seven per dollar for the first time since the start of 2017 - could spread.

In a statement on its website on Friday morning, China's securities regulator quoted its chief as saying it would encourage funds to help resolve liquidity difficulties at listed companies caused by stock pledging, and speed up approval for mergers and acquisitions as part of efforts to boost market confidence. Weakness is largely coming from the secondary industry- most notably manufacturing.

The euro was up 0.06 percent at $1.1459, having lost 1.3 percent in a month, while the dollar index, which tracks the greenback against a basket of six major rivals, was a touch higher at 95.943.

The policy push comes as growth of outstanding total social financing, a reliable gauge of overall credit conditions, slowed to 10.6 percent in September from 10.8 percent in August.

The pace was in line with market expectations and higher than the government's annual growth target of around 6.5 percent.

The authorities have said that the GDP growth will reach around 6.5 percent this year.

China's premier said this week that the country's economic faces increased downward pressure, but said the government will take targeted measures to stabilize growth.

Retail sales slowed recently, prompting forecasting firm IHS Markit to lower its estimate for upcoming holiday sales growth from 5% to 4.7%.

China is locked in a trade war with the United States, with Washington threatening to escalate the confrontation after imposing tariffs on 0 billion of Chinese goods.

Chinese stocks have slumped more than 11% so far this month as foreign investors and domestic institutions dumped shares amid concern about rising US Treasury yields and risks to the world's second largest economy, and as worries rose over the prospect of forced margin calls. Because of higher export and lower import numbers, China is running a bigger trade surplus with the US, which actually helps boost China's GDP. It inched up to 5.4 per cent in January-September from a record-low 5.3 per cent in the first eight months of the year as Beijing has reined in spending on bridges, railways, and highways.

Faced with a cooling economy, stock market wobbles and a yuan currency under pressure, policymakers are shifting their priorities to reducing risks to growth by gradually easing monetary and fiscal policy.

China has reported growth figures over the past two years that painted a picture of an economy that is gamely chugging along, despite the country's lingering problems and widespread doubts over the reliability of official numbers.

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