China's economic growth eased to 6.9 per cent in the third quarter from a year earlier, beating expectations but still the slowest since the global financial crisis, putting pressure on policymakers to roll out more support measures as fears of a sharper slowdown spook investors.
Analysts polled by Reuters had predicted gross domestic product (GDP) for the world's second-largest economy would come in at 6.8 per cent, compared with 7 per cent in the prior quarter.
Quarter-on-quarter growth was 1.8 per cent, the National Bureau of Statistics said at a news conference on Monday.
The market had expected GDP growth to come in at 1.7 per cent on a quarterly basis, compared to a revised reading of 1.8 per cent the prior quarter.
Fixed-asset investment growth eased to 10.3 per cent year-on-year in the Jan-September period, missing market expectations.
Analysts polled by Reuters predicted investment growth would come in at 10.8 per cent, compared with 10.9 per cent posted the prior month.
Industrial output growth also cooled more than expected to 5.7 per cent, disappointing analysts who expected it to rise 6 per cent on an annual basis after a rise of 6.1 per cent the prior month.
Retail sales quickened to 10.9 per cent.
Analysts forecast they would rise 10.8 per cent on an annual basis after a rise of 10.8 per cent the prior month.
Commentary
Zhang Yiping, Economist, China Merchant Securities, Shenzhen
"The sluggish real estate investment is an important factor for the low GDP and now it will certainly raise more concerns on this industry. I think the government will boost the infrastructure industry to offset the impact of the weak real estate investment.
"The government came up with lots of stimulus but they were not implemented well and thus didn't come to effect. If the policies helping the economy can be implemented thoroughly, I expect GDP will rebound in the fourth quarter and manage to remain at 7 per cent for the whole year."
Zhou Hao, Senior Economist at CommerzBank in Singapore
"Markets had expected to see either 6.8 or 6.9, but the overall downturn pressure on Chinese economy is still huge. And economic growth will slow further, and may dip to below 7 per cent for 2015."
"Property investment failed to have a dramatic recovery while the retail sales were the only highlight."
"The government will probably lower the full-year growth target at its policy meeting at the end of this month."
"The figure will not necessarily force the government to take out large-scale fiscal stimulus. I am expecting to see one interest rate cut and one to two reductions in RRR in the fourth quarter."
Oliver Barron, China Policy Researcher, NSBO, Beijing
"The GDP beat is surprising, given that the monthly FAI and industrial production figures slowed considerably, and much faster than expected.
"The data would suggest that retail sales is holding up the data and there are other areas that the government is factoring in consumption and services data that are not picked up in the monthly figures.
"I'm quite worried that real estate FAI fell 3.1 per cent despite the improvement in funding. Mortgages rose 90 percent year on year last month, home sales are still strong. The fact that real estate investment is weak will hinder Q4 economic recovery.
"Nominal GDP slowed to 6.6 per cent from 6.9 per cent in the first half, consistent with the slowdown in monthly figures and persistent deflation.
"Restructuring is apparent in the data as the services sector grew by 11.6 per cent in nominal terms vs. just 5.4 per cent for primary industry and 1.2 per cent for secondary."
Li Huiyong, Economist, Shenwan Hongyuan Securities, Shanghai
"The manufacturing industry might cause most concern as it is a pillar of China's economy.
"The central bank is very likely to cut the interest rate and reserve ratio to help the economy, maybe also reduce taxes. Some short-term stimulation is also in need, such as simplification of the stock market system to boost more medium and small enterprises."
"The GDP figure accords with the current situation basically, with weak data on export and import released earlier, indicating that the manufacturing industry is going through a hard time. We see China's economy under downward pressure but relatively stable between 2012 and 2017, which is also a transformation period of China."
Market reaction
Most Asian shares markets pared mild early losses after the data while China's stock indexes turned positive and the Australian dollar rose a quarter of a U.S. cent.
Background - China's government has fixed a growth target of around 7.0 per cent for 2015 but that seemed increasingly at risk after a raft of weak data over the summer. Beijing's surprise currency devaluation on Aug. 11 and a 40 per cent plunge in the country's stock markets also added to fears of shocks to the world's second-largest economy. - Even if the 7.0 per cent target is attained it would mark the slowest growth in a quarter of a century as activity is weighed down by weak exports, factory overcapacity, a soft property market, high debt levels, a government anti-corruption campaign and slowing investment. The economy grew 7.3 per cent in 2014. - Chinese leaders have been trying to reassure global markets that Beijing is able to manage the world's second-largest economy after the shock devaluation in the yuan and summer stock market crash sparked fears of an economic hard landing. - Some market watchers believe real growth is already much weaker than official data suggest. - Economists widely expected the government and central bank to unveil more stimulus measures to avert the risk of a sharper slowdown. - The central bank has already cut interest rates five times since November, and reduced the amount of cash that banks must hold as reserves to spur activity, though some analysts say such moves have not been as effective as in the past when the economy was more tightly controlled and debt levels were much lower. - Other support measures have included increased government spending on infrastructure and the easing of curbs on the ailing property sector, which have succeeded in reviving weak home sales and prices but have not yet reversed a sharp decline in new construction which is weighing on demand for materials from cement to steel. |