China’s economy expanded at a rate of 4.6% in the July-September quarter, falling short of the official target of around 5% growth for 2024. Despite recent efforts to boost the economy, including reducing mortgage rates and allowing banks to lend more, the country’s growth rate has slowed compared to the previous quarter. The National Bureau of Statistics described the economy as “generally stable with steady progress,” even in the face of external and domestic economic challenges such as low consumer confidence and a struggling real estate market.
For the first three quarters of the year, China’s factory output increased by 5.8% and retail sales by 3.3%, but property investment declined by 10.1% and new home sales dropped by 22.7%. In addition, September’s exports only grew by 2.4% from a year earlier, indicating weakening global demand. Analysts believe that while fiscal stimulus may help meet the annual growth target for the year, it is unlikely to prevent a slowdown in growth by the end of next year. Despite improvements in retail sales and industrial output, the housing market continues to struggle, with sales volumes decreasing and home prices falling.
The Chinese government has implemented various measures aimed at reviving the economy, such as cutting deposit rates at state-run banks and issuing guidelines for providing loans to companies for stock repurchases. Additionally, the central bank has emphasized strict oversight of these efforts to stabilize the share markets. These actions have led to a rally in the stock market, with Shanghai’s Composite index up by 2.1% and the benchmark in Shenzhen up by 2.4%. While these initiatives have boosted investor confidence, there is still concern among analysts and investors over the lack of significant government spending initiatives to address the economic challenges facing China.
Despite the recent efforts to stimulate the economy, the overall outlook remains uncertain. The government’s piecemeal approach to economic recovery has raised doubts among analysts about the effectiveness of these measures in achieving sustainable growth. While the reduction in mortgage rates and other stimulus measures may provide some short-term relief, many believe that more aggressive action is needed to address the underlying issues affecting the economy, such as weak consumer demand and a struggling real estate sector. As China continues to navigate through these challenges, the focus remains on finding effective solutions to spur growth and ensure economic stability in the years ahead.
Overall, the latest economic data from China paints a mixed picture of the country’s growth prospects. While there have been some positive developments in terms of industrial output and retail sales, challenges persist in key sectors such as real estate and exports. The government’s efforts to boost the economy through measures like cutting deposit rates and providing loans for stock repurchases have had a positive impact on the stock market but may not be sufficient to address the broader economic challenges facing China. As the government continues to navigate these challenges, the focus will be on finding comprehensive solutions that can support sustainable economic growth and stability in the long run.
