(Reuters) – China’s economy grew at the slowest rate in 2023 during the third quarter. Despite some positive consumer and industrial data, the struggling property sector remains a challenge for Beijing.
The economy expanded by 4.6% year-on-year from July to September, slightly beating the forecast of 4.5% but down from 4.7% in Q2.
Data Highlights:
- 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%, Aug +4.5%)
- Sept retail sales +3.2% y/y (forecast +2.5%, Aug +2.1%)
- Jan-Sept fixed asset investment +3.4% y/y
- Jan-Sept property investment -10.1% y/y
Market Reaction: The CSI300 Index fell 0.4%, and the Shanghai Composite Index decreased by 0.33% following the news.
Comments:
Economists suggest the data is stabilizing but acknowledge the government needs to implement more fiscal stimulus to drive growth.
Zhiwei Zhang noted that despite the slight GDP drop, reaching the government’s 5% growth target may be hard if current trends continue. Meanwhile, increasing policy measures are expected to be discussed in upcoming meetings.
Context: China continues to face challenges post-COVID, including a prolonged property slump and weak spending. Growth is projected to be around 4.8% for 2024, below the 5% target.
Additionally, an increase in fiscal measures and special bonds worth 2 trillion yuan is anticipated to help address these economic issues.
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