GDP expands 7.8 percent in Q3 but risk fears remain
Print Edition
China’s economy expanded 7.8 percent in the third quarter, up from an increase of 7.5 percent in the second quarter, but it was not free of risks.
In the first nine months, China’s economic output grew 7.7 percent from a year earlier to 38.68 trillion yuan (US$6.29 trillion), the National Bureau of Statistics said yesterday.
“China’s economy has managed to advance stably with major indicators moving within a rational range,” said Sheng Laiyun, a bureau spokesman.
“The economic conditions have improved in the third quarter, bolstering people’s confidence and helping to promote economic restructuring in favor of a growth with better quality,” Sheng said.
He attributed China’s faster growth pace to demand recovery at home and abroad at a time when the country carried out active supportive measures and companies tried to sharpen their own competitiveness.
Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said as the economy warmed up in the third quarter, China would be able to achieve the growth target of 7.5 percent this year. “Although exports slowed significantly in September, the domestic demand remains robust, supported by investment growth and resilient consumption,” Zhou said.
In the first three quarters, industrial production expanded 9.6 percent year on year, quickening from the pace of 9.3 percent in the first half, according to the official data.
Growth of fixed-asset investment, a gauge of government and private spending on infrastructure, stood at 20.2 percent in the first nine months, up 0.1 percentage points over the first half.
Retail sales, a key indicator of consumption, increased 12.9 percent on an annual basis in the January-September period. It accelerated from the rise of 12.7 percent in the first half.
But China’s exports declined for the first time in three months in September, pointing to risks that the recovery momentum may fade in the fourth quarter with other economic drivers still not strong enough.
Gao Ting, a senior executive at UBS, said China’s growth was powered mainly by investment in the recent recovery, which was not a strong footing as the market liquidity may face slowing growth amid credit tapering.
Meanwhile, as inflationary pressure surged with the Consumer Price Index rebounding to 3.1 percent in September, the central bank is unlikely to change the tightening bias in the monetary policy for the remainder of the year, Gao said.
Zhu Haibin, chief economist for China at JPMorgan, said the key question is the sustainability of the growth recovery.
“Achieving this year’s growth target is almost a sure thing,” Zhu said. “But there are still many downside risks that the country will have to face and address when it deepens its economic restructuring.”
With the Third Plenary Session of the 18th Central Committee of the Chinese Communist Party to be held soon, the economic reform will come back to the center of the table, Zhu said.
China has carried out a series of supportive measures since May to balance between short-term growth stability and medium-term risk mitigation. Supportive policies, such as tax reduction for small companies and more investment in railway which were dubbed as mini stimulus, have helped to invigorate the economy in the past few months.
President Xi Jinping said at the recent Asia-Pacific Economic Cooperation summit that China’s growth would remain robust despite a slowdown in the past year. He said the country was focusing more on improving the quality of and efficiency of growth, as long as the expansion was within the reasonable and expected range.
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