MENU

Chinese growth slows, tariffs start to bite

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.

Another ASX share to take advantage of the large Asian opportunity is this top growth share which is now expanding into the region.

The best dividend stock to buy in November

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!