(Reuters) – China’s economic growth slowed to the weakest pace in a year in the third quarter, matching expectations, as a prolonged real estate slump and trade tensions hurt demand, keeping pressure on authorities to deliver more stimulus to shore up momentum.
Data on Monday showed gross domestic product (GDP) grew 4.8% in July-September, slowing from 5.2% in the second quarter and in line with analysts’ expectations in a Reuters poll for a 4.8% rise.
KEY POINTS
* Third quarter GDP +4.8% year-on-year (forecast +4.8%, second quarter +5.2%)
* Q3 GDP +1.1% quarter-on-quarter/adjusted (f’cast +0.8%, Q2 +1.0% revised)
* September industrial production +6.5% year-on-year (f’cast +5.0%, August +5.2%)
* September retail sales +3.0% year-on-year (forecast +3.0%, August +3.4%)
* Investment in fixed assets from January to September -0.5% year-on-year (forecast +0.1%, January-August +0.5%)
* Real estate investment January-September -13.9% y/y (January-August -12.9%)
COMMENT
ALEX LOO, FX AND MACRO STRATEGIST, TD SECURITIES, SINGAPORE:
“Beijing is likely to meet its 2025 growth target of ‘around 5%’. The impressive growth record so far this year suggests little need for more fiscal stimulus at this juncture and Beijing would likely take a hardline stance in pressuring the US to reduce its technology restrictions in any potential trade deal. As the Fourth Plenary is underway, we expect the USD/CNY stays in a tight range like the People’s Bank of China. (PBOC) ensures that volatility is kept to a minimum during these major political events.”
TONY SYCAMORE, IG ANALYST, SYDNEY:
“Given everything that’s going on… my initial reading is that it’s a decent number.
“I don’t expect there to be broad-based stimulus measures. I know we have the fourth plenary session and I don’t expect there to be anything too significant. From now on, we’re going to continue to see targeted additional fiscal stimulus. There’s probably an idea that the third quarter GDP number will be the lowest point of this cycle and that they can try that additional targeted stimulus. You know the anti-revolution, all the rest of those measures to potentially take out the Chinese economy “will be back on a firmer footing by the end of the year.”
LI HAO, RESEARCH DIRECTOR, CYPRESS INVESTMENT MANAGEMENT, BEIJING:
“Third-quarter GDP growth was in line with expectations. At this stage, achieving the full-year growth target of 5% does not appear too difficult, assuming no major geopolitical or macroeconomic shocks. While short-term policy support may not exceed expectations, medium- and long-term efforts to stimulate domestic demand must continue.
“September data show that the underlying economic structure remains unchanged. Domestic demand remains weak, and investment and consumption are below forecasts. Meanwhile, resilient exports suggest that the anticipated concentration of overseas orders continues to boost factory activity.”
DAN WANG, CHINA DIRECTOR, EURASIA GROUP:
“The market understood that China was not going to meet the target, no matter what. Even with stimulus, it was going to be below 5%. But judging by the figure for the first three quarters, it is going to meet the target, which suggests that China can resist any pressure from the United States, even with such levels of tariff threats and export restrictions. Beijing is sending the signal that it is capable of achieving its development goals and is strongly committed to its policies.
TIANCHEN XU, CHIEF ECONOMIST, ECONOMIST INTELLIGENCE UNIT, BEIJING:
“The fourth quarter will be structurally different, with lots of investment and little consumption. After all, negative investment growth is not something policymakers want to see. Support measures implemented since September, such as policy financing tools and early issuance of government bonds, are aimed at public investment projects.”
ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT:
“China’s GDP growth slowed further in the third quarter. Fixed asset investment growth turned negative so far this year, which is rare and alarming. The Ministry of Finance announced the RMB 500 billion stimulus on Friday. This should help mitigate downward pressure on investment in the fourth quarter. However, the risk to GDP growth in the fourth quarter is likely be downwards.”
BACKGROUND
* China’s economy has steadily lost momentum after a strong start to the year, weighed down by a prolonged real estate slump, weak consumption and trade tensions.
* Trade frictions with Washington have intensified after China expanded its export controls on rare earths, prompting a threat from US President Donald Trump to raise tariffs by a further 100% from November 1.
* However, US officials have signaled that both countries were willing to lower the temperature in their tariff dispute.
* China has implemented modest support measures this year to preserve policy space for future shocks, taking advantage of resilient exports and strong stock markets.
* China’s heavy dependence on manufacturing and foreign demand has made it vulnerable to external shocks. Exporters are already feeling the impact of higher tariffs imposed by the United States earlier this year.
* While China’s export growth rebounded in September, much of the recent data shows the world’s second-largest economy has lost momentum.
* China’s economy is projected to grow 4.8% this year, below the official target of around 5%, according to a Reuters poll. Growth is expected to slow further to 4.3% in 2026.
(Reporting from Reuters Asia Bureaux; compiled and edited by Subhranshu Sahu)
