China published its weakest quarterly growth in a year and a half on Friday, despite all-out efforts to stabilize an economy weighed down by sluggish consumption and a real estate crisis.
The National Bureau of Statistics (NBS) announced that gross domestic product (GDP) grew by 4.6% in the third quarter year-on-year, reporting a “complicated and difficult external environment (…) as well as new problems of internal economic development”.
This figure, however, slightly exceeds the expectations of experts interviewed by AFP, who expected on average +4.5%.
It nevertheless remains below the +4.7% of the April-June period, and above all represents the weakest growth since the beginning of 2023, when China was barely emerging from its health policy. “zero Covid” which had paralyzed travel and consumption, and therefore strangled economic activity.
An encouraging sign, however: retail sales, the main indicator of household consumption, rebounded over one year in September (+3.2%), after only +2.1% in August.
They bring a glimmer of hope after disappointing indicators in terms of inflation, investment and trade.
Faced with the economic slowdown, the authorities have been pulling out all the stops in recent weeks. They announced bursts of measures to stimulate activity, with the aim in particular of achieving the official objective “around 5%” growth for 2024.
Among these announcements, interest rate reductions, particularly for existing property loans, as well as relaxations of restrictions on the purchase of housing.
“Good direction”
Latest measure: major Chinese banks, including Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China, announced on Friday that “interest rates on yuan deposits will be lowered”according to public television CCTV. This is the second reduction this year.
The government assured that it had “all confidence” in achieving the annual growth objective.
But observers, analysts and investors seem to be expecting more, in particular more direct financial aid to revive activity.
The recent burst of announcements is a step “in the right direction”tells AFP Benson Wu, economist specializing in China at Bank of America Global Research.
“That said, the scale and form of financial aid are not yet clear”he notes. “There are still points to be clarified before we can carry out a detailed assessment of the effectiveness of these policies. »
Main pitfall to the current recovery: the persistent crisis in real estate.
Long the engine of Chinese growth, the sector is today in great difficulty, with indebted developers, unfinished construction and falling prices, even in large cities.
In September, the prices of new housing only increased over one year in… two of the 70 large and medium-sized cities analyzed, the BNS said on Friday.
American elections
On Thursday, the authorities announced that they would increase credits intended for unfinished real estate projects to more than 500 billion euros.
They also promised to facilitate the renovation of one million homes – a measure also intended to stimulate activity in the construction sector.
Several large Chinese cities such as Beijing, Shanghai (east) and Tianjin (north) have also relaxed their restrictions on the purchase of real estate in recent weeks.
In a context of job insecurity, low consumption also risks pushing China back into deflation.
The consumer price index (CPI), the main gauge of inflation, increased by 0.4% in September year-on-year, less than expected and a sign of persistent weakness in demand.
The GDP figure announced on Friday means that Beijing’s target of growth of around 5% in 2024 will be “difficult to reach” unless there is a reversal of the trend by the end of the year, noted analyst Zhang Zhiwei of Pinpoint Asset Management in a note.
“We may have to wait until November to know more, as the outcome of the US election is likely one of the factors influencing policy thinking in Beijing”he added.
