Chinese growth slows, tariffs start to bite

The Chinese economic growth numbers came in lower than expected.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Chinese economy is slowly losing steam after a decade of strong growth.

Bloomberg reported that Chinese GDP came in at 6.5% higher in the third quarter than a year ago. However, this growth was lower than the annual 6.7% growth achieved last quarter.

However, it wasn't all bad news. Retail sales grew by 9.2% in September, compared to a forecast of 9%. The urban monthly surveyed employment rate was 4.9% at the end of September.

Why does this matter?

China is very economically important for Australia. A strong Chinese economy helps the Australian economy.

Whether you think it's good or not, tens of thousands of Chinese students go to Australian universities and many ASX companies rely on China for some, or most, of their revenue. Think of BHP Billiton Limited (ASX: BHP), a2 Milk Company Ltd (ASX: A2M), Bellamy's Australia Ltd (ASX: BAL) and Blackmores Limited (ASX: BKL) to name a few.

The trade war could have a negative effect in the coming quarters. Bloomberg quoted National Bureau of Statistics spokesman Mao Shengyong saying that there was "downward pressure" on China's economy due to the international situation.

No economy will keep going up forever at 8% per year forever, or whatever some economists would like. Every year that the economy gets bigger it becomes harder to keep growing at the same pace – the mathematics of size is unavoidable.

Foolish takeaway

Despite the slowing growth, I firmly believe that some Chinese businesses offer investors a number of attractive growth opportunities. That's why I think Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE) and UBS IQ Asia ETF (ASX: UBP) could be long-term ideas.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

asx share price boosted by us investment represented by hand waving US flag across winning athlete
Best Shares

Here are the best-performing ASX 200 shares since the US election result

We reveal the 10 ASX stocks that have had the highest share price gains since the US Presidential election.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face due to his ASX shares going up and in particular the Computershare share price
Share Market News

5 things to watch on the ASX 200 on Friday

A decent finish to the week is expected for Aussie investors.

Read more »

A smiling man at a shop counter takes payment from a female customer, with racks of plants in the background.
Best Shares

Here's why I think Wesfarmers shares are a great buy for any ASX investor

I argue that Wesfarmers offers investors both growth and income potential.

Read more »

A golfer celebrates a good shot at the tee, indicating success.
Share Market News

Here are the top 10 ASX 200 shares today

ASX investors finally enjoyed a win this Thursday...

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Industrials Shares

Up 39% in a year, is there more growth to come for this ASX 200 share?

IML Equity Analyst Josh Freiman shares his views on a major ASX 200 industrial stock.

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

What the latest US inflation print means for ASX 200 investors

The ASX 200 is likely to benefit if the US Fed cuts interest rates again in December. But will it?

Read more »

guy helping girl invest in shares and dividends
Opinions

5 ways for investors buying ASX shares to stay focused during economic uncertainty

AMP Chief Economist, Dr Shane Oliver, offers advice on how to handle the Trump factor.

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why Graincorp, Light & Wonder, Orica, and Wildcat shares are falling today

These shares are having a tough time on Thursday. But why?

Read more »