(Reuters) – China’s economy grew by only 4.6% in Q3, its slowest since early 2023. Although consumption and industrial output improved, a struggling property sector is a major issue for growth.
Key Data:
- Q3 GDP: 4.6% y/y (forecast: 4.5%, Q2: 4.7%)
- Q3 GDP: 0.9% q/q (forecast: 1.0%, Q2: 0.5% revised)
- Sept Industrial Output: +5.4% y/y (forecast: +4.5%)
- Sept Retail Sales: +3.2% y/y (forecast: +2.5%)
- YTD Fixed Asset Investment: +3.4% y/y (forecast: +3.3%)
- YTD Property Investment: -10.1% y/y
Market Response:
The CSI300 Index fell 0.4%, and the Shanghai Composite Index dropped 0.33% after the data was released.
Expert Opinions:
Woei Chen Ho from UOB noted the market reacted calmly as growth remains stable, focusing on potential government fiscal stimulus. Benson Wu from BofA expects GDP growth of 4.8% for the year, influenced by upcoming fiscal policies.
Toru Nishihama highlighted China’s ongoing issues with oversupply and demand, questioning if new stimulus measures would be enough to improve the situation. Alvin Tan mentioned that the data is lagging, reflecting past conditions rather than current stimulus efforts.
Zhiwei Zhang pointed out that the slight decline in GDP makes it harder to reach the government’s 5% growth target, suggesting a policy change may be coming.
Background:
- China’s post-COVID recovery has been weak, affected by a declining property market and high local government debt.
- Expected growth for 2024 is 4.8%, below the target of about 5%.
- The central bank announced significant stimulus measures to combat deflation.
- Investors are looking for clearer fiscal policies from China’s legislature soon.
- China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) for stimulus, mostly for local government debt management.
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