A woman walks outside a construction site in Beijing’s central business district
yesterday. China grew at its slowest pace since the global financial crisis in the
September quarter.AFP
China’s gross domestic product (GDP) expanded in the third quarter at its slowest pace since the depths of the global financial crisis, official data showed yesterday, but analysts said the world’s second-largest economy may have bottomed out.
The 7.3% year-on-year increase in July-September was lower than the 7.5% expansion in the previous three months, the National Bureau of Statistics (NBS) said, and the slowest since the 6.6% in the first quarter of 2009.
However, it exceeded the median forecast of 7.2% in an AFP survey of 17 economists. China’s economy – a key driver of global growth – is suffering from a deflating property bubble, a crackdown on corruption and weak demand from Europe, prompting authorities to introduce monetary easing measures.
While the headline figure was likely to add to concerns about the world economy, officials were quick to put a largely positive spin on it.
China showed “good momentum of stable growth” in the first three quarters, said NBS spokesman Sheng Laiyun, with “progress made and quality improved”.
But he acknowledged the third quarter slowdown was partly due to “unexpectedly greater pains brought by the structural reform” which included “still pronounced overcapacity in traditional industries” and a correction in the property market this year.
“The internal and external environment is still complicated and the economic development still faces many challenges,” he said.
The NBS said GDP expanded 7.4% in January-September, and Sheng said growth had remained in a “reasonable range” as, among other factors, job creation was stable. China’s official 2014 growth target is about 7.5% in March, the same as last year, though officials including Premier Li Keqiang have openly stated it could come in lower.
The analysts polled by AFP forecast growth of 7.3% this year, unchanged from the previous estimate three months ago but slower than actual growth of 7.7% in 2013.
“The momentum of the economy bottoming out and stabilising is now relatively clear,” Ma Xiaoping, a Beijing-based economist for British bank HSBC, told AFP. “Currently there’s no risk of an accelerated slowdown,” she added.
The NBS also said industrial production, which measures output at factories, workshops and mines, rose 8.0% year-on-year in September, against a more than five-year low of 6.9% in August.
“This is encouraging, as of all the monthly data, industrial production has the strongest correlation with GDP growth, so this bodes well for an economic recovery this quarter,” Nomura economists wrote in a reaction note to yesterday’s data.
Retail sales, a key indicator of consumer spending, expanded 11.6% in September, while fixed asset investment, a measure of government spending on infrastructure, rose 16.1% on-year in the first nine months.
However, Liu Dongliang, of China Merchants Bank, said the GDP figure was “a result of multi-rounds of mini-stimulus measures, showcasing that the pressure of the economic downturn is still relatively high”.
Chinese stocks edged down yesterday, with the benchmark Shanghai Composite Index closing 0.72% lower at 2,339.66.
Authorities have since April used a series of measures to underpin growth, on a far smaller scale than the 4tn yuan stimulus of 2008 introduced to battle the effects of the global financial crisis.
Beijing has so far used targeted cuts in reserve requirements – the amount of funds banks must put aside – as well as a 500bn yuan injection into the country’s five biggest banks for re-lending.
Analysts are divided over whether the central People’s Bank of China might resort to an across-the-board reserve requirement cut or even slashing interest rates. The government still has weapons in its arsenal, including greater infrastructure spending and tax cuts, while easier mortgage lending polices announced last month could take the sting out of falling housing prices, they say.
Declines in average new home prices in 100 major cities accelerated in September, dropping for the fifth straight month, a private survey showed. The NBS said yesterday that China’s total home sales fell 10.8% year-on-year to 4.05tn yuan in the first nine months of 2014.
China’s leaders have indicated that lower growth is the new normal as they carry out long-awaited economic reforms and transform the country’s growth model to one driven by consumer spending.
“The upshot is that although growth has slowed, it reflects a welcome rebalancing away from excess investment in certain sectors of the economy and is not cause for significant concern,” Julian Evans-Pritchard, China economist at Capital Economics, said in a note.