(Reuters) – China’s economy expanded 4.6% in the third quarter from a year earlier, official data showed on Friday, slightly beating analysts’ expectations, maintaining pressure on policymakers as they consider more stimulus measures.
Economists polled by Reuters had expected third-quarter gross domestic product to have grown 4.5% from a year earlier, slowing from 4.7% in the previous three months.
KEY POINTS
* Q3 GDP +4.6% y/y (f’cast +4.5%, Q2 +4.7%)
* Q3 GDP +0.9% q/q (f’cast +1.0%, Q2 +0.5% revised)
* Sept industrial output +5.4% y/y (f’cast +4.5%, Aug +4.5%)
* Sept retail sales +3.2% y/y (f’cast +2.5%, Aug +2.1%)
* Jan-Sept fixed asset investment +3.4% y/y (f’cast +3.3%, Jan-Aug +3.4%)
* Jan-Sept property investment -10.1% y/y (Jan-Aug -10.2%)
COMMENTARY:
ZHIWEI ZHANG, PRESIDENT AND CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT
“China’s economic growth edged down in Q3 to 4.6% from 4.7% in Q2. While it is a marginal decline, it makes the official growth target of 5% difficult to achieve if this trend continues to year-end.
“This may be why the government decided in the Politburo meeting to change policy stance and boost growth. We are waiting for more clarity on fiscal stimulus. We may have to wait till November to find out details, as the outcome of the US election is probably one factor that will influence the policy thinking in Beijing.”
BACKGROUND
* China has struggled to mount a strong and sustainable post-COVID economic rebound, burdened by a protracted property downturn, massive local government debt and weak private-sector spending.
* The world’s second-largest economy is expected to expand 4.8% in 2024, undershooting the government’s target of about 5%, a Reuters poll showed. Growth is seen slowing further in 2025, to 4.5%.
* Authorities have sharply ramped up policy stimulus since late September, but analysts believe much more is needed, and quickly, to reach the growth target and put the economy on more solid footing next year. Longer-term structural challenges such as overcapacity, high debt levels and an ageing population are also in play.
* The central bank unveiled its biggest stimulus since the pandemic late last month, aiming to pull the economy out of its deflationary funk.
* Investors are now hoping for a clearer and more substantial fiscal policy roadmap at the next meeting of China’s rubber-stamp legislature which is expected in coming weeks.
* Reuters reported last month that China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh stimulus, but half of that would be used to help local governments tackle their debt problem.
