China’s GDP grows fast in third quarter but outlook murky
Investment has accounted for more than half of the expansion this year
CThe world’s second-largest economy grew 7.8 per cent in the third quarter from a year earlier, in line with expectations. Photograph: Nelson Ching/Bloomberg
China’s economy grew at its quickest pace this year between July and September, underpinned by investment, although analysts question if the vigour would continue in coming months.
The world’s second-largest economy grew 7.8 per cent in the third quarter from a year earlier, in line with expectations, data from the National Bureau of Statistics showed today.
So far this year, investment has accounted for more than half of the expansion, showing the challenges faced by Beijing in trying to restructure the economy towards consumption, which policymakers expect to provide more sustainable growth in the years ahead.
After slipping in eight of the last 10 quarters, analysts said growth may fall once again in the current October-to-December period. Exports are expected to soften and authorities may also rein-in credit expansion after inflation pushed to a seven-month high.
“The growth peak was behind us in the third quarter,” said Ting Lu, an economist at Bank of America-Merrill Lynch. “We believe the People’s Bank of China will slightly shift its monetary policy from a moderate expansion in the third quarter to a neutral stance.”
After three decades of double-digit expansion fuelled by exports and investment, Beijing is trying to shift or “restructure” the economic mix so that activity is geared much more to consumption.
That means the economy has slowed down compared with previous years, although sluggish global demand has provided an added weight dragging on China’s growth.
For the first nine months, the economy grew 7.7 per cent, keeping it on track to achieve the government’s growth target of 7.5 per cent this year, far outperforming other major economies but still the worst performance for China in 23 years.
The fragility of China’s latest economic revival comes as no surprise. Exports suffered a surprise fall in September after demand from emerging nations crumbled on volatile financial markets, a trend the government said this week is expected to last.
And with the yuan hitting a record high today for the fifth consecutive day, powered in part by strong capital inflows, Chinese exporters may face a tougher time yet as the rising currency erodes their competitiveness.
“The economy is facing a complex and uncertain domestic and international environment,” Sheng Laiyun, a spokesman for the National Bureau of Statistics told a briefing.
“In addition, we have accummulated chronic structural imbalance problems in our economy and need to deepen reforms to address them.”
The latest data shows China is still a long way from having consumption as the mainstay driver of growth.