Workers take a rest outside a construction site in Shanghai, China. Chinese leaders... Read More
Gross domestic product rose 7.3 percent in the July-September period from a year earlier, the statistics bureau said today in Beijing. While that exceeded the 7.2 percent median estimate in a Bloomberg News survey of analysts, it was also the slowest expansion since the first quarter of 2009.
China’s leaders have relaxed home-purchase controls and the
central bank has pumped liquidity to lenders as they seek to limit a property-induced slowdown. The government has eschewed across-the-board interest rate cuts and signaled it will tolerate a weaker expansion, leaving the economy headed for the slowest full-year growth since 1990.
“Decent exports and the fact that there is more to China’s domestic demand than real estate dampen the overall slowdown,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong. “Barring a major further slowdown we expect the policy stance to remain relatively restrained.”
Industrial production rose 8 percent in September from a year earlier, compared with the 7.5 percent median estimate of analysts and August’s 6.9 percent, which was the slowest in more than five years. Retail sales increased 11.6 percent from a year earlier, compared with the 11.7 percent seen by economists and August’s 11.9 percent.
Investment Slows
Stocks slipped in China on speculation the better-than-estimated growth will curb prospects for large-scale stimulus. The Australian dollar strengthened and the yuan advanced for a second day.The 7.3 percent growth “is not as bad as expected,” Wang Tao, head of China economic research at UBS AG in Hong Kong, wrote in an e-mail. As China has relaxed property purchase credit rules, Wang said “better property sales” are expected in the fourth quarter.
Fixed-asset investment excluding rural households increased 16.1 percent in the first nine months from a year earlier, the statistics bureau said, the slowest rate since 2001. That compared with the median estimate of analysts for 16.3 percent growth and the 16.5 percent pace in the January-August period.
The People’s Bank of China has avoided cuts to benchmark interest rates or banks’ reserve requirements to boost growth. It lowered the interest rate it pays lenders for 14-day repurchase agreements for the second time in a month on Oct. 14 and has also injected liquidity into some banks.
Policy Restraint
Premier Li Keqiang has expressed a preference for reform to boost the economy and PBOC Governor Zhou Xiaochuan has vowed to stick with a prudent monetary stance. President Xi Jinping said in May that the nation needs to adapt to a “new normal” in the pace of growth.“The government has reiterated that no broad stimulus will be implemented, and I think today’s data will further bolster and strengthen that trend,” said Zhu Haibin, chief China Economist at JPMorgan Chase & Co. in Hong Kong.
Industrialization and urbanization will continue to drive China’s expansion, Sheng Laiyun, spokesman of the National Bureau of Statistics, said at a briefing in Beijing. Growth in combined exports and imports accelerated to 3.3 percent in the first three quarters from a year earlier, the NBS said in the statement, up from 1.2 percent in the first six months of the year.
Services Expansion
The world’s second-largest economy grew a seasonally-adjusted 1.9 percent last quarter from the previous period, the statistics bureau said, compared with the 1.8 percent median estimate of analysts and 2 percent in the second quarter.GDP in January to September climbed 7.4 percent, led by a 7.9 percent expansion in services. Growth for the agricultural industry was 4.2 percent, while the so-called secondary industry including mining and manufacturing, grew 7.4 percent.
“China’s growth is still resilient,” said Lu Ting, Bank of America Corp.’s head of Greater China economics in Hong Kong. “Those stimulus measures which were introduced in the past month boosted confidence.”
Lu said he expects more targeted easing in coming weeks.
Investment weakness caused by credit supply strains has worsened and external demand that helped stabilize the economy won’t last, given the sluggish outlook for developed economies, Xu Gao, a Beijing-based economist at Everbright Securities Co., wrote in a note today.
“China’s policymakers will roll out additional pro-growth measures to aid the economy,” he said.
Rate Cut
Xu said further monetary policy relaxation may come in the form of lower interbank rates to encourage banks to lend more for projects.Efforts by China’s central bank to push down interbank market rates will have limited effects in lowering financing costs in the economy, Chang Jian, chief China economist at Barclays Plc in Hong Kong, wrote in a note.
“Without cutting the benchmark deposit rate, lending rates cannot be reduced meaningfully,” she said.
Chang said the PBOC may cut its benchmark interest rates this quarter and again in the first quarter of 2015.
HSBC Holdings Plc economists Qu Hongbin and Julia Wang wrote in a note that “a rate cut is still an option toward year end or early 2015” if existing targeted measures by the PBOC fail to bring down borrowing costs for investment.
The International Monetary Fund on Oct. 7 cut its outlook for global growth in 2015 to 3.8 percent from a July forecast of 4 percent. The U.S. will expand 3.1 percent next year, compared with 1.3 percent for the euro area and 0.8 percent for Japan. China is projected to grow 7.1 percent, its slowest since 1990, according to IMF data.
Chinese leaders will set an economic growth target of about 7 percent for 2015, according to 13 of 22 analysts polled by Bloomberg.
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