China’s economy has shown signs of slowdown in the third quarter, marking the slowest growth rate since early last year. The latest figures indicate that gross domestic product (GDP) increased by 4.6% year-on-year for the three months ending September, falling short of the government’s annual target of approximately 5%.
Despite the lower GDP growth, the results slightly exceeded analysts’ expectations. Additionally, other economic indicators such as retail sales and industrial output reported stronger-than-expected performances.
In response to the ongoing economic challenges, Beijing has introduced several measures aimed at stimulating growth. This marks the second consecutive quarter where economic growth has not met the 5% target, intensifying concerns within the government.
Economic expert Eswar Prasad highlighted the jeopardy of the government’s growth objective for this year, emphasizing the need for substantial stimulus in the final quarter to reach the target. Meanwhile, economist Harry Murphy Cruise from Moody’s Analytics expressed a more optimistic view, suggesting that recent stimulus measures might help the economy meet the 5% goal, although more action is necessary to tackle structural economic issues.
Official reports also noted a significant decline in new home prices in September, the steepest drop in nearly a decade, further exacerbating the challenges within the property sector. Lynn Song, chief economist at ING for Greater China, stated that the property market significantly hampers economic growth, projecting that new investments will only recover once housing prices stabilize and inventories decrease.
On the financial front, China’s central bank has gathered financial institutions to encourage increased lending to bolster growth. Recently, the People’s Bank of China (PBOC) unveiled its most substantial stimulus package since the pandemic, featuring significant cuts to interest and mortgage rates along with strategies to revitalize the stalling stock market.
With ongoing efforts from the Ministry of Finance and other governmental bodies to enhance economic growth, China’s position as the world’s second-largest economy faces a range of challenges, including a property crisis and diminishing consumer and business confidence.
