China continued its grind to more moderate growth in the third quarter as investment slowed, providing little upside for a global economy flirting with its first recession since 2009.

Gross domestic product rose 6% in the July-September period from a year ago, the slowest pace since the early 1990s and weaker than the consensus forecast of 6.1%. On the upside, factory output improved and retail sales held up, but slowing investment growth remained a concern.

Policy makers appear to be allowing the world’s second-largest economy to drift lower as they seek to clean up the financial system and curb excessive credit growth while they fight a confidence-sapping trade war with US President Donald Trump. With a drop off in exports to the US expected to continue as long as tariffs remain, the economy is likely to keep struggling as falling factory prices hit company profits and rising consumer inflation hits spending power.

Even with the slowdown, year-to-date growth of 6.2% suggests the government can hit its target of an expansion of 6% to 6.5% for 2019. 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. A meeting of the Communist Party’s top leadership due in the coming days may present an opportunity to review stimulus settings.

“China’s economy is grappling with both external and internal headwinds,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings in Hong Kong. “Exports started to contract of late amid wobbly global demand and rising tariffs in the US. Despite some stabilisation in retail sales and industrial production in September, overall demand continues to soften, reflecting still relatively tight credit conditions.”

Stocks pared earlier gains after the data, with the Hang Seng slipping 0.5% and the Shanghai Composite falling 1.3%. The offshore yuan was weaker at 7.0850 per dollar at 2:43 p.m. in Hong Kong.

Nominal growth, which is un-adjusted for inflation, slowed to 7.6% from a year earlier, according to Bloomberg calculations. That’s the slowest since the third quarter of 2016.

The nominal growth rate “tends to capture the cycles in the economy better,” according to a research note from Trivium China. It also gives a better idea of whether growth is fast enough to repay the nation’s growing debt, as lending is denominated in nominal values and isn’t adjusted for inflation.

The slowing nominal rate indicates that the deflator, a reading of inflation across the economy, dipped to 1.6%.

INSIGHT FROM THE CANTON FAIR

Some manufacturers exhibiting at the world’s largest trade fair in Guangzhou this week are sanguine about the ongoing trade war. Haze Jiang, who handles North American sales for Zhuguang Group Sanmen Christmas Arts & Crafts Co., said the impact from tariffs on their holiday decoration business was limited. But there’s no sign inflation will go down, and that could hurt profits if the yuan gets stronger, she told Bloomberg.

As China slows, it is buying less from the rest of the world, pushing its trade surplus higher and dragging on global economic growth. That’s having a knock-on effect on trade partners, from developed economies like Germany to commodity suppliers.

Global policy makers including People’s Bank of China Governor Yi Gang are meeting in Washington this week for the International Monetary Fund’s (IMF's) annual meetings. The IMF set the tone for the gathering, making its fifth-straight cut to its forecast for 2019 global growth, which is on pace for the slowest expansion in a decade.

The long-term slowdown underlines the challenge for companies doing business in China now, where high sales growth had once been a given.

French distiller Pernod Ricard said growth in China slowed to 6% in the latest three months, less than one-quarter of the year-earlier rate. Nestle said sales in the country were flat for the first nine months, while Unilever said business there “slowed a little” in the latest period.