China’s economic growth slowed in the third quarter to its weakest since the 2008-09 global financial crisis as a slumping property market dragged on manufacturing and investment, adding to concerns about flagging global growth.
The world’s second-largest economy grew 7.3 per cent between July and September from a year earlier, slightly above the 7.2 per cent forecast by analysts but slowing from 7.5 per cent in the second quarter. The slowdown reinforced expectations that Beijing will need to unveil more stimulus measures to avert a sharper slowdown, though analysts appeared divided over whether policymakers would continue to roll out more modest support steps or take more aggressive action such as cutting rates.
The weaker gross domestic product figure fed speculation that China will miss its official full-year growth target of 7.5 per cent, even though Premier Li Keqiang has stated repeatedly that the country can tolerate slightly lower growth.
Li has instead indicated that the leadership’s bottom line is maintaining robust employment levels to ward off social unrest, a policy priority for China’s stability-obsessed Communist government.
“GDP is higher than we expected. We guess it may be due to better growth in the services sector,” said Wang Tao, an analyst at UBS in Hong Kong. “But the weakest part of China’s economy is still the property sector. The government has relaxed some controls recently and property sales may pick up in the fourth quarter. However, we may not see improvement in sectors like heavy industry and we expect the economy to continue to slow down.”
UBS expects the central bank to cut interest rates by the end of the year, though some other economists believe Beijing is unlikely to take bolder action unless conditions threaten to sharply deteriorate.
On a quarter-on-quarter basis, growth eased to 1.9 per cent versus expectations of 1.8 per cent and down from 2 per cent in the second quarter.
A raft of lacklustre and at times alarming economic data presaged slowing third-quarter growth in China, with the growing drag from the property market blunting the impact of stimulus measures rolled out earlier in the year.
Other data released alongside the GDP report showed factory output rose 8 per cent in September from a year earlier, beating expectations for a 7.5 per cent increase and up from August’s 6-year low of 6.9 per cent.