China’s growth dragged down by construction, bolstered by tech

Residential buildings stand under construction beyond a pile of earth in Golmud, Qinghai province, China. (Bloomberg pic)

BEIJING: Construction and manufacturing were the main drags for China’s slower-than-expected third-quarter economic growth while technology offered some support, supplementary data released Saturday show.

Growth in the construction sector slowed to 2.5% from a year earlier compared with 4% in the previous quarter, the statistics bureau said. The financial sector also grew at a slower pace of 4% while information technology continued to expand at a fast clip of 32.8%, compared with 31.7% in the second quarter.

The main gross domestic product report released Friday showed the overall economy expanded 6.5%. That’s the slowest pace since the aftermath of the global financial crisis in 2009.

The economy has faced increasing headwinds this year, with simmering trade tensions and a slumping stock market hurting confidence in the outlook. Those problems have prompted officials to step up stimulus and pledge further support, but the impact of those measures has yet to kick in and more may be needed.

The weak construction reading tallies with data in Friday’s GDP report that showed infrastructure investment continuing to contract. Manufacturing growth further slowed to 6% from 6.6% in the second quarter, the weakest level since the set of the data was first available last March.

The services sector remains the dominant driver of growth and accounts for more than half of total economic output. Third-quarter services growth edged up to 7.9% from 7.8% in the second.

Repeated pledges by China’s leaders to firmly curb home prices continued to weigh on housing. Growth in real-estate-services activity slowed to 4.1% from 4.2% as the government’s buying curbs started to bite on brokers.

The GDP breakdown, typically released a day after the headline report, offers greater detail on progress in the economy’s re-balancing from old smokestack industries to newer services and consumption. The statistics bureau now publishes growth rates for the technology and commercial-services sectors, highlighting the contributions of the new economy that policy makers are doing more to encourage and support.

The services sector accounted for 53.1% of GDP value in the first three quarters, slowing from 54.1 in the first half, while consumption contributed 78% to growth in the six-month period, data from Friday showed.