China’s Economic Growth has shown further signs of deceleration, with the latest data indicating that growth in the third quarter was the slowest since early last year. According to figures released by the National Bureau of Statistics, the country’s gross domestic product (GDP) rose by 4.6% year-on-year in the three months leading up to September. This marks a decline from the previous quarter and falls short of the government’s target of approximately 5% for the year.
Slightly Better Than Expectations
Despite the slowdown, the reported growth slightly exceeded analysts’ expectations. Additional figures released alongside the GDP data, including retail sales and factory output, also performed better than forecast. In response to the mounting economic pressures, Beijing has rolled out several measures aimed at stimulating growth.
This represents the second consecutive quarter where China’s economic growth has fallen below the government’s target, raising concerns among officials. Analysts note that the current trajectory jeopardizes the government’s growth objectives for the year, highlighting the need for a substantial stimulus to boost economic activity in the fourth quarter.
Mixed Views on Future Growth
While some economists express concern over the government’s ability to meet its targets, others maintain a more optimistic outlook. An economist from Moody’s Analytics suggested that the recently introduced stimulus measures could help the economy reach the approximately 5% growth target for the year. However, he emphasized that more comprehensive actions are necessary to tackle the underlying structural challenges facing the economy.
Challenges in the Property Sector
Official data also revealed troubling trends in the property market, where new home prices experienced their most significant decline in nearly a decade as of September. This downturn further illustrates the ongoing difficulties within the property sector, which continues to be a major impediment to China’s economic growth. Analysts noted that the property market remains a critical issue, with new investments unlikely to see a substantial recovery until property prices stabilize and housing inventories decrease.
The chief economist for Greater China at a major banking institution highlighted the detrimental impact of the property market on economic performance. Until there is a stabilization in home prices, the sector will continue to pose significant challenges for growth.
Central Bank’s Response
Earlier in the week, China’s central bank convened to urge banks and financial institutions to increase lending to support economic growth. Last month, the People’s Bank of China (PBOC) unveiled the country’s largest stimulus package since the onset of the pandemic, which included significant reductions in interest and mortgage rates. These measures also aimed to bolster the struggling stock market and encourage financial institutions to lend more to businesses and individuals.
In addition to the central bank’s initiatives, various government bodies have introduced further plans intended to stimulate economic activity.
Ongoing Economic Challenges
The world’s second-largest economy faces numerous challenges, including a persistent property crisis, alongside weak consumer and business confidence. The combination of these factors has contributed to a complex economic landscape that poses significant risks to sustained growth.
As the Chinese government navigates these challenges, the focus remains on implementing effective measures to revitalize the economy. With the end of the year approaching, stakeholders will be closely monitoring the effectiveness of the announced stimulus packages and their impact on achieving the government’s growth targets.
