(Reuters) – China’s financial system expanded 4.6% within the third quarter from a 12 months earlier, official information confirmed on Friday, barely beating analysts’ expectations, sustaining strain on policymakers as they contemplate extra stimulus measures.
Economists polled by Reuters had anticipated third-quarter gross home product to have grown 4.5% from a 12 months earlier, slowing from 4.7% within the earlier three months.
KEY POINTS
* Q3 GDP +4.6% y/y (f’solid +4.5%, Q2 +4.7%)
* Q3 GDP +0.9% q/q (f’solid +1.0%, Q2 +0.5% revised)
* Sept industrial output +5.4% y/y (f’solid +4.5%, Aug +4.5%)
* Sept retail gross sales +3.2% y/y (f’solid +2.5%, Aug +2.1%)
* Jan-Sept fastened asset funding +3.4% y/y (f’solid +3.3%, Jan-Aug +3.4%)
* Jan-Sept property funding -10.1% y/y (Jan-Aug -10.2%)
COMMENTARY:
ZHIWEI ZHANG, PRESIDENT AND CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT
“China’s financial progress edged down in Q3 to 4.6% from 4.7% in Q2. Whereas it’s a marginal decline, it makes the official progress goal of 5% tough to attain if this pattern continues to year-end.
“This can be why the federal government determined within the Politburo assembly to alter coverage stance and enhance progress. We’re ready for extra readability on fiscal stimulus. We might have to attend until November to seek out out particulars, as the end result of the US election might be one issue that may affect the coverage pondering in Beijing.”
BACKGROUND
* China has struggled to mount a robust and sustainable post-COVID financial rebound, burdened by a protracted property downturn, large native authorities debt and weak private-sector spending.
* The world’s second-largest financial system is predicted to develop 4.8% in 2024, undershooting the federal government’s goal of about 5%, a Reuters ballot confirmed. Development is seen slowing additional in 2025, to 4.5%.
* Authorities have sharply ramped up coverage stimulus since late September, however analysts consider rather more is required, and shortly, to achieve the expansion goal and put the financial system on extra stable footing subsequent 12 months. Longer-term structural challenges corresponding to overcapacity, excessive debt ranges and an ageing inhabitants are additionally in play.
* The central financial institution unveiled its greatest stimulus because the pandemic late final month, aiming to tug the financial system out of its deflationary funk.
* Buyers at the moment are hoping for a clearer and extra substantial fiscal coverage roadmap on the subsequent assembly of China’s rubber-stamp legislature which is predicted in coming weeks.
* Reuters reported final month that China plans to difficulty particular sovereign bonds price about 2 trillion yuan ($284.43 billion) this 12 months as a part of contemporary stimulus, however half of that may be used to assist native governments deal with their debt downside.