Chinese roared ahead at its fastest pace this year, as the world’s second largest economy temporarily shook off its first-half slowdown in the third quarter.
Its economy advanced 7.8 per cent on a year ago between July and September, up from 7.5 per cent in the second quarter. The official figures – which came out yesterday, two days after US politicians agreed a deal to avert a debt default – mark a welcome return to faster growth after slowing for eight of the past 10 quarters.
China remains on course to meet its official 7.5 per cent growth target this year, but analysts immediately questioned whether Beijing would be able to sustain the pace in the final quarter, after worrying recent signs including sliding exports and slowing industrial production during September. The IMF forecasts growth of 7.6 per cent for the full year – China’s weakest performance since the early 1990s – although some economists are pencilling in a figure below 7 per cent.
Third-quarter growth was fuelled by government stimulus programmes, looser monetary policy and surging property prices, although inflation pushing to a seven-month high could tie the hands of policymakers in the months ahead. Shen Jianguang, the chief China economist at Hong Kong’s Mizuho Securities, said: “Tougher measures may be forthcoming and we expect GDP growth will slow to 7.6 per cent in the fourth quarter.”
Wei Yao, an economist at Société Générale, said: “Activity growth slid across the board in September. The data releases confirm our view of a short-lived headline growth bounce.” Chinese growth was also hampered last month by droughts as well as floods across the country caused by Typhoon Usagi.
The US Federal Reserve has added to Beijing’s headaches in recent weeks by delaying its decision to “taper” quantitative easing, pushing funds back into China and lifting the value of the yuan to record levels.
This puts Chinese exporters under pressure as the rising currency erodes their competitiveness. “The economy is facing a complex and uncertain domestic and international environment,” a spokesman for China’s National Bureau of Statistics said. “In addition, we have accumulated chronic structural imbalance problems in our economy and need to deepen reforms to address them.”
China is also struggling to rebalance its economy towards domestic spending, with investment this year accounting for more than half of growth. This has slowed its advance in recent years, although sluggish global demand has provided an added drag. Tim Condon, an economist at ING Bank, said: “Rebalancing means more consumption – and less investment-driven growth. If it’s happening, it’s happening slowly.”Reuse content