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- China’s GDP increased by 4.6% in the third quarter, marking its slowest growth rate in six quarters.
- The People’s Bank of China initiated two market support programs following the release of economic data.
- The country is targeting a GDP growth rate of around 5% for the current year.
On Friday, China disclosed its third-quarter economic performance, revealing the slowest growth seen in six quarters. Despite this, stock markets experienced an uptick due to renewed confidence stemming from actions taken by the central bank.
The nation’s economy expanded by 4.6% during Q3 as reported by China’s statistics bureau, which emphasized a “stable growth trend.” This figure surpassed economists’ expectations of 4.5%, although it fell short compared to the previous quarter’s growth rate of 4.7%.
Sheng Laiyun, deputy head of China’s statistics bureau, expressed optimism about achieving the official GDP goal for this year based on signs of stabilization and recovery observed in September.
With Q3 results now included, China’s economy has recorded an overall increase of 4.8% during the first three quarters—placing it within “striking distance” to meet its annual target according to Lynn Song, chief economist for Greater China at ING.
Retail sales figures from September also showed positive momentum with a rise of 3.2%, reaching their highest level in four months and exceeding economists’ predictions that anticipated only a 2.5% increase.
Additionally, industrial production saw an impressive gain as it grew by 5.4%, surpassing forecasts that had estimated only a 4.5% rise.
However, some analysts remain skeptical about whether these economic indicators truly reflect a robust recovery phase.
“We should be cautious about overemphasizing these better-than-expected key indicators from September since significant structural weaknesses persist within both property and household sectors,” noted Betty Wang, lead economist at Oxford Economics in her commentary on Friday.
A concerning statistic emerged regarding new home prices; they plummeted by 5.8% compared to last year—the steepest decline since May 2015 according to calculations made by Reuters.
“The real estate sector continues to be the primary obstacle hindering China’s economic progress,” Song remarked while emphasizing that achieving stability within this market remains elusive.
Support Measures from The People’s Bank of China
In response to these developments on Friday, markets received encouragement when the People’s Bank of China (PBOC) announced two funding initiatives aimed at injecting up to ¥800 billion (approximately $112 billion) into financial markets through share buybacks and swap facilities—measures initially introduced late last month as part of broader efforts designed to bolster stock market performance.
PBOC Governor also hinted at potential interest rate reductions during remarks made at a recent financial forum held on Friday.The announcements positively influenced investor sentiment leading both CSI300 index and Hong Kong’s Hang Seng Index each closing up by 3 .6%.
“Currently we are witnessing what can be described as ‘bad news is good news’ where disappointing data suggests further stimulus measures may follow,” stated Larry Hu who leads Macquarie Group’s economics division focused specifically on Chinese matters.
Challenges facing China include ongoing issues such as high youth unemployment rates coupled with deflationary pressures alongside weakened consumer confidence resulting primarily from individuals prioritizing savings over expenditures amid prevailing downturn conditions.
In light recent events surrounding negative sentiment trends following years filled with adverse reports along with last month’s substantial rally losing steam; authorities have frequently referenced support strategies aimed towards revitalizing public outlooks moving forward.
I believe they are genuinely striving towards stabilizing overall economic activity,” commented Rajiv Biswas who serves internationally recognized economist roles while authoring works like “[Asian Megatrends](https://affiliate.insider.com?h=2252c62746e53e506c655ce3df395bcea3ecbee5e1b11653f5e13361d3be9338&postID=6711e994e5b54083005dea1d&postSlug=china-economy-3q-gdp-growth-stock-market-stimulus-2024-10&site=bi&u=https:%2F%2Fwww.amazon.com%2FAsian-Megatrends-Rajiv-Biswas%2Fdp%2F1137441887). He anticipates continued efforts from Beijing aimed toward fostering improved conditions ahead entering into next fiscal period.”
Bettina Wang added insights suggesting enhanced coordination between monetary policies alongside fiscal strategies will likely intensify throughout upcoming quarters thereby cushioning potential downside risks impacting overall national economy.”
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