China’s economic growth slows to a 26-year low amid tariff and other woes

China’s economic growth slowed more than expected in the third quarter, with lackluster domestic demand and the ongoing downturn in global trade weighing on output.

Gross domestic product rose 6% in the July-to-September period from a year earlier, the slowest pace since the early 1990s and weaker than the consensus forecast of 6.1%. Factory output rose 5.8% in September, retail sales expanded 7.8%, while investment gained 5.4% in the first nine months of the year.

Growth in the previous quarter was 6.2%.

The slowdown is further evidence that the Chinese government is letting the world’s second-largest economy drift lower while it seeks to clean up the financial system and curb credit.

Even without the drop-off in exports to the U.S., the economy is likely to continue struggling, with deflationary pressures hitting company profits and falling imports indicating that domestic demand is weak.

The data increase the risk that the government won’t hit its target of achieving growth of 6% to 6.5% for 2019, unless support measures are significantly stepped up. Until now, officials have focused on limited, targeted measures such as reserve-ratio cuts and credit support, wary of expanding the nation’s already heavy debt load.

“Momentum has been easing since the second half of 2018, driven by industrial weakness and moderating consumer demand,” said Li Wei, a senior economist at Standard Chartered in Shanghai. “The protracted U.S.-China dispute, which now goes well beyond just trade, has hit the sentiment badly. More policy stimulus can be expected as growth is now on the brink of sliding below the official target.”

The U.S.-China tariff battle has slowed global manufacturing, creating a drag on an overall economic growth.