Fran Wang Beijing
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 percent year-on-year increase in July-September was lower than the 7.5 percent expansion in the previous three months, the National Bureau of Statistics (NBS) said, and the slowest since the 6.6 percent in the first quarter of 2009.
China’s economy, a key driver of global growth, is suffering from a deflating property bubble, a corruption crackdown and weak demand from Europe, causing 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.”
The NBS said GDP expanded 7.4 percent 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 percent in March, the same as last year, though officials including Premier Li Keqiang have openly stated it could come in lower.
“The momentum of the economy bottoming out and stabilising is now relatively clear,” said Ma Xiaoping, an economist for HSBC. “Currently, there’s no risk of an accelerated slowdown.”
The NBS also said industrial production, which measures output at factories, workshops and mines, rose 8 percent year-on-year in September, against a more than five-year low of 6.9 percent 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 yesterday.
Retail sales, a key indicator of consumer spending, expanded 11.6 percent in September, while fixed asset investment, a measure of government spending on infrastructure, rose 16.1 percent 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”.
Stocks edged down yesterday, with the benchmark Shanghai Composite Index closing 0.72 percent lower at 2 339.66.
Authorities have since April used a series of measures to underpin growth, on a smaller scale than the 4 trillion yuan (R7.1 trillion) stimulus of 2008 introduced to battle the effects of the global financial crisis.
Beijing has used targeted cuts in reserve requirements as well as a 500 billion yuan injection into the country’s five biggest banks for re-lending.
Analysts are divided over whether the People’s Bank of China may resort to an across-the-board reserve requirement cut or even slash 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. – Sapa-AFP