China says third-quarter economic growth slowed to 4.9%
CHINA’S economic growth slowed to 4.9 per cent in the third quarter, official data showed on Wednesday (Oct 18), as an unprecedented property crisis hit consumption and business activity in the country.
The figure exceeded a forecast of 4.5 per cent in a Bloomberg survey of analysts, but was well off the 6.3 per cent expansion enjoyed in the previous three months.
The country faced a “grave and complex international environment and challenging tasks in promoting reform, development and stability at home” in the first three quarters of 2023, the National Bureau of Statistics said.
The real estate sector, which has long accounted for a quarter of the country’s gross domestic product, supports thousands of companies and is a major source of employment.
The industry enjoyed dazzling growth for decades, but the recent woes of key developers including Evergrande and Country Garden are now fuelling buyer mistrust while homes lie unfinished and prices plummet.
Country Garden, one of China’s biggest property firms and long believed to be financially sound, failed last month to repay interest on a loan totalling US$15.4 million.
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The group has been granted a 30-day grace period which ends on Wednesday, and risks default if it does not honour the repayment.
Authorities have stepped up incentives for property purchases in recent months to reinvigorate the sector, but buyers remain cautious.
Households are watching their spending amid sluggish growth, which in turn has hurt consumption.
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A week-long national holiday in October has nevertheless helped boost spending on tourism and other services.
“China’s economy has shown signs of stabilisation,” Nomura analyst Ting Lu said in a note.
Retail sales, the main indicator of household consumption, rose a forecast-beating 5.5 per cent on-year in September, according to official figures published on Wednesday by the NBS.
Industrial production growth in September stayed flat at 4.5 per cent, while urban unemployment dipped to 5 per cent in September from 5.2 per cent in August.
Unemployment data no longer includes a breakdown for 16- to 24-year-olds, after it hit a record high in June of 21.3 per cent.
“China’s economic recovery continued in September, driven by better-than-expected retail sales,” Zhang Zhiwei, chief economist of Pinpoint Asset Management, said in a note.
China is aiming for “around 5 per cent” growth this year – from a low base last year when the domestic economy was paralysed by strict Covid restrictions.
Zhang said he believed “the improvement in Q3 economic data makes it less likely for the government to launch stimulus in Q4, as the growth target of 5 per cent is set to be achieved”.
Last year, the economy grew 3 per cent, far from the official target of 5.5 per cent, and one of the slowest rates in four decades. AFP
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