The third quarter saw the slowest growth in China’s GDP, with growth of 4.6% from July to September. This growth rate is only somewhat higher than the anticipated 4.5% and lower than the 4.7% growth rate from the previous quarter. Officials are nevertheless optimistic about reaching the government’s 5% growth goal for 2024 in spite of this downturn.
China’s Economic Challenges
Businesses are still being impacted by weak domestic demand.
The severe vulnerability of the real estate industry is still unresolved.
A major worry is the slowing increase of exports.
Government Reaction
Since late September, Beijing has significantly expanded policy stimulus to fight the slowdown. Authorities intend to take more actions, such as lowering the requirements for bank reserves.
Professional Opinions
“China’s Q3 data aligns with market expectations, considering weak domestic demand, a struggling housing market, and slowing export growth,” said Bruce Pang, Chief Economist at JLL.
“The stimulus package will take time and patience to boost growth over the next several quarters.”
Betty Wang, Oxford Economics economist: “We would downplay the importance of better-than-expected key economic indicators in September, given the structural weakness in the property and household sectors remains largely unaddressed.”
“The recently announced stimulus measures could cushion downside risks to next year’s growth but are unlikely to reverse the structural downturn.”
Economic Forecasts
China’s economy is expected to grow 4.8% in 2024, which is less than Beijing’s goal, according to a Reuters poll. In 2025, growth might further drop to 4.5%.
Official Confidence
“Our thorough assessment indicates that the economy will continue the stabilization and recovery trend that began in September in the fourth quarter,” said Sheng Laiyun, deputy head of China’s statistics bureau.
“We are fully confident in achieving the full-year target.”
Economic Data for September
Retail sales were higher than expected.
The output from the factory exceeded expectations.
The real estate market was still exhibiting severe weakness.
Expectations of the Market
In order to boost the economy, analysts demand a more precise policy blueprint. The quantity and timing of the stimulus package’s execution are yet unknown to the markets.
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