China says third-quarter economic growth slowed to 4.9%

China says third-quarter economic growth slowed to 4.9%

China's economy has been hobbled by a crisis in the country's vast property sector
China's economy has been hobbled by a crisis in the country's vast property sector. Photo: STR / AFP
Source: AFP

China's economic growth slowed to 4.9 percent in the third quarter, official data showed Wednesday, as an unprecedented property crisis hit consumption and business activity in the country.

The figure exceeded a forecast of 4.5 percent in a Bloomberg survey of analysts but was well off the 6.3 percent 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.

Read also

China's third-quarter economic growth slows to 4.9%: official data 

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 $15.4 million.

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.

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 percent on-year in September, according to official figures published on Wednesday by the NBS.

Read also

US retail sales higher than expected in September: govt

Industrial production growth in September stayed flat at 4.5 percent, while urban unemployment dipped to 5.0 percent in September from 5.2 percent 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 percent.

"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 five percent" 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 third-quarter economic data makes it less likely for the government to launch stimulus in the fourth quarter, as the growth target of five percent is set to be achieved".

Last year, the economy grew three percent, far from the official target of 5.5 percent, and one of the slowest rates in four decades.

New feature: Сheck out news that is picked for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Online view pixel