China’s GDP growth hit a five-year low in the third quarter of this year, as it struggles with a weakening property market, slumping industrial production and declining domestic demand.
In Q3 2014, China’s GDP grew by 7.3% (year-on-year), according to the National Bureau of Statistics, which is the country’s lowest expansion rate for one quarter since Q1 2009 (6.6%).
In the second quarter of 2014, the economy had expanded by 7.5%.
Tuesday’s figures now cast serious doubts on whether China will meet its annual growth target. The last time such targets were missed were 16 years ago during the Asian financial crisis of 1998.
China’s Communist Party has repeatedly warned that its 7.5% GDP growth target is “an approximate one” – and that it would accept a slightly lower level.
Economists believe authorities will have to pursue targeted easing measures to boost demand and bolster business activity. Most analysts are now expecting even slower growth in the fourth quarter.
Investors across the world have been increasingly concerned about China’s economy, Japan’s sluggish output and the Eurozone’s multiple woes. Disappointing figures coming out of China could undermine demand for Chinese stocks. However, Asian stock markets posted marginal gains on Tuesday.
(Data source: National Bureau of Statistics of China)
Factory output increased in September by 8% compared to the same month last year, versus 6.9% in August.
Fixed-asset investment in urban areas rose 16.1% during the first nine months of this year, compared to January-September 2013. In the January-August 2014 period it had risen by 16.5% versus Jan-Aug 2013.
Retail sales posted an 11.6% increase in September compared to September 2013, August’s figure versus August 2013 was +11.9%.
The property market saw a 10.8% fall in in sales (by value) from January to September 2014.
Chinese authorities say the country needs an annual growth rate of at least 7.2% as 10 million people join the labor market each year.
The National Bureau of Statistics of China said in a statement today:
“In the first three quarters of 2014, faced with the complicated conditions at home and abroad, the Central Party Committee and the State Council grasped the general trend of development and committed to the tone of moving forward while maintaining stability as well as promoting reform and innovation, adopted scientific measures to stabilize economic growth, promote reforms, enhance restructuring, benefit people and control risks, and paid more attention to targeted regulation on the basis of the ranged approach. The general economic performance was moving by steady steps in the new normal with progress made and quality improved.”
