China’s GDP grew at its slowest pace in more than a year

ByEditor

Oct 18, 2024

China’s GDP grew at its slowest pace in more than a year

In the third quarter, China’s economy grew at the slowest pace since the beginning of 2023, in the context that real estate is still a barrier for the country.

On October 18, Chinese officials announced data showing that GDP increased by 4.3% in the third quarter. This number exceeds the forecast of 4.5% of analysts in the above survey Reutersbut lower than the second quarter (4.7%). This is also the lowest increase since the beginning of 2023.

In September, industrial output and retail sales increased by 5.4% and 3.2%, respectively. However, the real estate sector is still a major obstacle, making it difficult for Beijing to promote growth.

“The third quarter data are not surprising. Domestic demand is weak, the housing market is still struggling and export growth is slowing down. The stimulus package announced at the end of September needs time to be effective, possibly a few more quarters,” said Bruce Pang – chief economist at JLL.

Customers buy vegetables at a supermarket in Beijing (China). Image: Reuters

Since the end of September, the world’s second largest economy has launched a series of fiscal and monetary stimulus measures, aiming to achieve a growth target of around 5% this year. The Central Bank of China (PBOC) reduced the required reserve ratio for banks, lowered lending reference interest rates and home purchase prepayment rates to 15%.

China’s Economic Development and Reform Commission (NDRC) also allocated 200 billion yuan (28 billion USD) for local investment projects, one year ahead of schedule. The Ministry of Finance pledged to increase fiscal support, but has not given many details.

China’s economic growth is currently uneven. Industrial production exceeds domestic consumption, raising deflation risks. The real estate market shows no signs of revival and local government debt is at high levels. Policymakers are pledging to shift their focus to consumption, rather than pouring money into manufacturing and infrastructure.

“Even though the third quarter GDP growth was not significantly lower than the second quarter, it also shows that it will be difficult for China to achieve its growth target if this trend is maintained until the end of the year. We are waiting for further detailed announcements.” about fiscal easing policy,” said Zhiwei Zhang – Chief Economist at Pinpoint Asset Management.