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China's Q3 GDP growth slows to 6.5% YOY, missing expectations

China's economy cooled further in the third quarter to a weaker-than-expected 6.5% annual growth, easing from the 6.7% expansion recorded in the second quarter and 6.8% in the first quarter, preliminary estimates from the National Bureau of Statistics showed.

On a quarter-over-quarter basis, China's economy grew 1.6%, in line with expectations. For the first three quarters of 2018, China's GDP expanded by 6.7% year over year. The government has set a full-year growth target of around 6.5% in 2018.

This is the first quarterly GDP release since China and the U.S. imposed tariffs on each other's goods amid trade tensions. U.S. tariffs on Chinese goods worth $34 billion took effect in July, plus on an additional $16 billion in August and $200 billion in September, with China retaliating with its own set of duties on U.S. goods.

Industrial production grew 5.8% year over year in September.

In the first nine months of 2018, industrial production climbed 6.4% year over year, 0.3 percentage points lower than the first six months. Of these, production by the mining industry increased by an annual 1.8%, production by the manufacturing industry climbed 6.7%, while production and supply of power, heat, gas and water rose 10.3%.

Fixed-asset investments in the first nine months of 2018 rose 5.4% year over year to 48.34 trillion yuan, 0.6 percentage points lower than the first six months.

Retail sales increased 9.2% year over year in September, inching up 0.2 percentage points from August.

In the first nine months of 2018, retail sales climbed 9.3% year over year to 27.43 trillion yuan, edging down 0.1 percentage point from the first six months.

Retail sales of petroleum and related products increased by 14.4%, up 5.4 percentage points from the year-ago period, while sales of telecommunications devices climbed 10.7%, 1.4 percentage points higher than the prior-year period.

The yuan was little changed against the dollar at 6.94 as of 12:05 a.m. ET, following the data release. The Shanghai Stock Exchange Composite Index edged down 0.02% and Hong Kong's Hang Seng Index slipped 0.34%, as the broader MSCI Asia ex-Japan index dipped 0.37%

On China's growth prospects in the fourth quarter, NBS spokesman Mao Shengyong, said the country's economy is resilient and has sound fundamentals. He said Beijing will focus on implementing its so-called "six stabilities" policy, focusing on employment, finance, foreign trade, foreign investment, domestic investment and market expectations.

As of Oct. 18, US$1 was equivalent to 6.94 yuan.