Beijing combines efforts to rebalance its business model and “targeted” support with activity measures.
July to September, the growth of Chinese gross domestic product (GDP) stood at 7.3%, its lowest level since the first quarter of 2009, following growth of 7.5% in the second quarter, said Tuesday the National Bureau of statistics (NBS).
This is slightly better than the forecast made by 17 surveying analysts by AFP (+ 7.2%) forecast.
“Strong headwinds” have been blowing real estate sector is in disarray, persistent overcapacity in the industry and public debt sector aggravated in recent months, experts have commented on the bank Nomura.
However, “although growth is slowing, it is a welcome sign of rebalancing the detriment of excessive investment in certain sectors,” observed however Julian Evans-Pritchard from Capital Economics.
“A slight slowdown (in China) is considered a healthy evolution,” was also noted in early October by the International Monetary Fund (IMF).
In fact, the numbers of the third quarter, “partly by unexpected and painful repercussions caused by structural reforms” are in progress, said Tuesday Sheng Laiyun, spokesman for the SNB.
The government shows its intention to “rebalance” the economic model of the country – in trimming monopolies of large public groups and industrial overcapacity and drastically curbing public debt – even to see a somewhat moderated growth.
On the first nine months of the year, growth has been 7.4%, said the NBS. Beijing has set for the end of 2014 a goal of “about 7.5%”.
“This is still within the range considered reasonable,” and the growth of the labor market remains “stable”, assured Mr. Sheng.
Shadow of the real estate sector
In spring the authorities had adopted “mini-stimulus”: fiscal and monetary easing, reductions targeted to encourage lending to small enterprises – but whose effects had dissipated over the summer.
And statistics released Tuesday by the SNB offered a mixed picture.
In August after experiencing its lowest growth rate over 5 years (+ 6.9%), industrial production has accelerated more than expected in September, blowing 8% year on year.
“An encouraging sign, leaving bode well for economic recovery in the last quarter,” they thought in Nomura. In contrast, retail sales, a barometer of consumer spending, have slowed again last month, with swelling 11.6% year on year.
As for investment in fixed capital who reflect expenditures in infrastructures, they increased by 16.1% over the first nine months of 2014, a figure lower than expected and again accusing a slowdown.
And while the MoM decline of new housing prices continued in September, the SNB reported a 10.8% drop in home sales since the beginning of the year.
“The growth momentum is expected to attain a floor and, for the moment, there is no risk that the slowdown will worsen,” suggested Ma Xiaoping, an economist at HSBC. In these circumstances, Beijing could just continue “approach supports target”, she told AFP.
In fact, the central bank has injected mid-September 500 billion yuan (63 billion euros) in the five largest banks in the country, and would provide additional liquidity injections in twenty banks: so many ways to facilitate credit businesses.
In the opinion of analysts, Beijing could also beef up its spending in some “effective” infrastructures. And the relaxation of conditions for obtaining mortgages, announced in late September, should support the sector.
But despite a possible start in the fourth quarter, analysts surveyed by AFP expect 2014 growth of 7.3% (against 7.7% in 2013), is the weakest performance of the country for nearly a quarter century.
“While the slowdown is concentrated in sectors in overcapacity and the economy as a whole remains healthy, leaders will not panic. Employment and rebalancing the economy are their priorities,” insisted Julian Evans-Pritchard.