China released data on its quarterly growth this Friday, which is the weakest in a year and a half. All this, despite the saves from implemented measures to boost consumption and the real estate sector.
The gross domestic product (GDP) of the Asian giant grew 4.6% year-on-year in the third quarterthe National Statistics Office (ONE) has indicated in a statement. The figure slightly exceeds the expectations of the experts interviewed by AFP, who predicted an average growth of 4.5%. However, it is lower than the +4.7% in the April-June period and, above all, represents the weakest growth since the beginning of 2023, when China began to relax its strict measures against covid-19.
The ONE attributed the slowdown to a “complicated and difficult external environment (…), as well as new internal economic development problems,” although there are signs of hope.
Retail sales, the main indicator of household consumption, rose year-on-year in September (+3.2%), after +2.1% in August, which represents an encouraging sign. Likewise, urban unemployment fell to 5.1% in September, compared to the 5.3% of August.
These figures represent the positive note after a series of disappointing data on inflation, investment and trade. Faced with this economic slowdown, the authorities have announced in recent weeks a series of measures to stimulate activity.
Beijing tries to hide the real estate problem
With the help of these measures, the Chinese government aims to grow 5% this year, a number that any Western country would envy, but which is very far from the double-digit expansion that sustained its economy for years.
One of the main problems facing the Asian Giant is the crisis in its real estate sector, which was an economic engine and now accumulates massive debt.
Beijing is “trying to convince with more noise than anything else about the stabilization of the real estate market,” Stephen Innes of SPI Asset Management commented in a note. “But let’s be honest, the Chinese real estate problem is not something that can be fixed with a few speeches and half-measures,” Innes added.
Another interest rate cut
This Friday, the central bank of that country announced a program aimed at insurance companies and investment funds. And its governor, Pan Gongsheng, indicated that a new reduction in the required reserve ratio (RRR) for banks could be carried out before the end of 2024, to provide greater lending margin.
At the same time, the country’s main banks announced that “interest rates on yuan deposits will be lowered,” according to public television CCTV. This is the second reduction so far this year.
These recent announcements are steps “in the right direction”, Benson Wu, an economist specializing in China at the Bank of America Global Research, told AFP. But “there are still points to be clarified before a detailed evaluation of the effectiveness of these policies can be made,” he added.
For analyst Zhang Zhiwei, from Pinpoint Asset Management, Beijing’s goal of growing around 5% in 2024 will be “difficult to achieve”, unless the trend reverses by the end of 2024. “We may have to wait until November to find out more, as the outcome of the US elections is likely one of the factors influencing political thinking in Beijing,” he added in a note
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