Beijing, China – China’s economy grew more than expected in the third quarter, data showed Wednesday, but the reading was still below target and officials continue to face calls for more stimulus while struggling to contain an unprecedented property crisis.
The 4.9 percent expansion in July-September was helped by forecast-beating retail sales figures and follows a series of broadly positive readings that point to a period of stability following months of weakness despite the lifting of strict zero-Covid measures.
But authorities are still on edge over turmoil in 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.
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
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 on Wednesday.
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 has hurt consumption this year, though a week-long national holiday in October helped boost spending on tourism and other services.
That was reflected in retail sales, the main indicator of household consumption, which the National Bureau of Statistics said rose a better-than-expected 5.5 percent on-year in September.
Stimulus calls
But the government continues to face calls for measures to rekindle the economy.
While leaders have unveiled a series of targeted stimulus for various sectors — particularly property — pressure is building on them to announce wider-ranging support.
Bloomberg News reported last week that Beijing was looking at issuing almost $140 billion in sovereign debt to boost the beleaguered economy, with cash would be spent on various projects.
However, observers say the blockbuster spending splurge unveiled in 2008 during the financial crisis was unlikely.
In a sign of the need for more support, data Wednesday also showed 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.
Analysts polled by AFP predicted an average 4.3 percent on-year growth for third-quarter GDP, while experts surveyed by Bloomberg expected 4.5 percent.
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.
But Stephen Innes, managing partner at SPI Asset Management, warned that China continued to face significant economic risks.
“China’s high levels of corporate and local government debt, often seen as unsustainable, pose a risk to the economy. Managing this debt without causing a financial crisis is a significant challenge,” he wrote in a note.
Meanwhile, trade tensions with Washington as well as an ageing population were “long-term structural impairments that could affect economic growth”, Innes said, adding that “China’s economy is not out of the woods by any means”.