China’s economy expanded at its slowest pace since the global financial crisis, data showed yesterday, as the world’s second biggest economy struggled with falling property prices, weak domestic demand and lower factory output.
Gross domestic product expanded 7.3 per cent from a year ago in the third quarter, compared with 7.5 per cent in the second quarter and 7.4 per cent in the first quarter of this year, data from the National Bureau of Statistics showed.
The GDP growth in the July-September period marked the slowest quarterly growth since the first quarter of 2009 and was in line with market expectations.
China now looks likely to miss its annual growth target of 7.5 percent, which would be the first miss since the Asian financial crisis in 1998, and is on track for the lowest economic growth since 1990.
“In general, the economy has maintained steady development momentum in the first three quarters, but the environment at home and abroad remains complex,” Sheng Laiyun, a spokesman for the National Bureau of Statistics, told a news conference, adding that there were difficulties and challenges ahead.
Mr Sheng said slower growth was the “new normal” and said China would keep stable macro policies that are subject to forward-looking fine-tuning when appropriate to ensure steady and healthy economic growth.
He said there had been progress in restructuring the economy in the first three quarters, with the service industry accounting for 46.7 per cent of GDP, 1.2 percentage points higher than the same period last year.
Retail consumption contributed 48.5 per cent of growth in the period, or 2.7 percentage points more than last year.
Other data is also feeding into the picture of slower growth. Industrial production rose 8 per cent in September from a year earlier, the slowest in more than five years, while retail sales increased 11.6 per cent from a year earlier, below expectations and lower than August’s 11.9 per cent.
"The outturn was better than our (7.1 per cent) and consensus (7.2 per cent) forecasts, but remains consistent with our view that relatively weaker data in Q3 reflects the government's shift towards tolerating lower growth," the investment bank Barclays said in a research note.
“We expect growth to be supported by the government’s “targeted easing” measures, a relaxation of macroprudential measures to support the property market, and investment projects to be rolled out to prevent a sharp downturn,” Barclays said.
The government has introduced a series of measures to try and stimulate the property market, including relaxing restrictions on home purchases and increasing liquidity to banks.
Beijing has indicated that it is geared up for lower growth. Premier Li Keqiang has stated repeatedly that authorities will tolerate growth slightly below target as they try to reshape the economy so it is driven more by domestic consumption and less by exports and investment, and the government has avoided interest rate cuts.
"Healthy consumption growth and strong foreign demand mean the economy has held up better than many had feared," wrote Julian Evans-Pritchard at Capital Economics.
“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,” said Mr Evans-Pritchard. “With policymakers now prioritizing employment and economic rebalancing over growth, we don’t think they will feel the need to act aggressively to shore up the economy in response to today’s data.”
