(Reuters) – China’s economy grew by 4.6% in the third quarter, the slowest pace of 2023. Despite better-than-expected consumption and industrial output last month, a struggling property sector remains a major issue for growth.
Q3 growth was slightly above the forecast of 4.5% but down from 4.7% in Q2.
KEY POINTS:
- Q3 GDP +4.6% (forecast +4.5%, Q2 +4.7%)
- Q3 GDP +0.9% quarter-on-quarter (forecast +1.0%, Q2 +0.5% revised)
- Sept industrial output +5.4% (forecast +4.5%, Aug +4.5%)
- Sept retail sales +3.2% (forecast +2.5%, Aug +2.1%)
- Fixed asset investment (Jan-Sept) +3.4% (forecast +3.3%)
- Property investment (Jan-Sept) -10.1%
MARKET REACTION:
CSI300 Index fell 0.4%; Shanghai Composite Index dropped 0.33% after the news.
COMMENTARY:
WOEI CHEN HO, UOB, SINGAPORE: “The GDP growth is stable, and market focus is on the government’s next fiscal stimulus.”
BENSON WU, BOFA GLOBAL RESEARCH: “We expect annual GDP growth at 4.8%. Future growth will depend on upcoming fiscal packages.”
TORU NISHIHAMA, DAI-ICHI LIFE: “Excess supply and lack of demand are concerns; stimulus measures may help near-term but won’t fully solve the issues.”
ALVIN TAN, RBC CAPITAL MARKETS: “These are backward-looking figures; actual impacts of recent stimulus will be clearer in the future.”
ZHIWEI ZHANG, PINPOINT ASSET MANAGEMENT: “The slight decline makes the 5% growth target harder to reach, prompting possible policy shifts.”
BACKGROUND:
China’s post-COVID recovery has been weak due to property market issues, high debt, and reduced consumer spending. Predictions suggest a 4.8% growth for 2024, still below the target of 5%. More substantial policy actions are needed urgently to stabilize the economy.
Investors are looking for clear fiscal policies from the upcoming legislature meeting. China plans to issue about 2 trillion yuan in special bonds this year to support local governments.
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