China’s economy grew at the slowest pace since early last year in the third quarter, and although consumption and factory output figures beat forecasts last month a tumbling property sector remains a major challenge for Beijing as it races to revitalize growth.
Authorities have sharply ramped up policy stimulus since late last month, but markets are waiting for more details on the size of the package and a clearer road map to put the economy back on a solid longer-term footing.
The world’s second-largest economy grew 4.6 percent in the third quarter, official data showed, a touch above a 4.5 percent forecast in a Reuters poll, but below the 4.7 percent pace in the second quarter.
Photo: Bloomberg
“China’s Q3 2024 data is not a turn-up for the books,” JLL chief economist Bruce Pang (龐溟) said. “The performance aligns with market expectations, given the weak domestic demand, a still struggling housing market and slowing export growth.”
“The stimulus package announced at the end of September will take time and patience to boost growth over the next several quarters,” he said.
Officials addressing a post-data news conference yesterday expressed confidence that the economy could achieve the government’s full year growth target of about 5 percent, underpinned by further policy support and another cut to the amount banks must hold in reserve.
“Based on our comprehensive assessment, the economy in the fourth quarter is expected to continue the stabilization and recovery trend that occurred in September. We are fully confident in achieving the full-year target,” Chinese Statistics Bureau deputy head Sheng Laiyun (盛來運) told reporters.
Policymakers could take some comfort in forecast-topping industrial output and retail sales data for last month, but the property sector continued to show weakness and underline markets’ calls for more support steps.
“We would downplay the importance of better-than-expected key economic indicators in September given that the structural weakness in the property and household sectors remains largely unaddressed,” Oxford Economics economist Betty Wang (王蕊) said.
“The recently announced stimulus measures could cushion the downside risks to next year’s growth, but are unlikely to reverse the structural downturn,” she said.
A Reuters poll showed China’s economy is likely to expand 4.8 percent this year, undershooting Beijing’s target, and growth could cool further to 4.5 percent next year.
On a quarterly basis, the economy expanded 0.9 percent in the third quarter, compared with revised 0.5 percent growth in the second quarter, and below the forecast of 1.0 percent.
With 70 percent of Chinese household wealth held in real estate, a sector that at its peak accounted for one-quarter of the economy, consumers have kept their wallets shut tight.
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