In brief
China's economy has hit a rough patch, with third-quarter growth registering at 4.6% year-on-year, confirming a slowdown that raises concerns about achieving the government's ambitious growth target. According to China's National Bureau of Statistics, this figure not only trails the previous quarter's performance but also falls short of the government's "around 5%" goal for the year. Despite surpassing analysts' expectations, the economy's persistent decline below this target signals potential difficulties ahead. The recent downturn is the second consecutive quarter of lackluster growth, with experts expressing mixed opinions about the needed measures to revitalize the economy.
Former IMF China division head Eswar Prasad warns that serious efforts are required, stating, "The government’s growth target for this year now appears in serious jeopardy." He urges the need for substantial stimulus in the fourth quarter to rescue the growth target. Conversely, economist Harry Murphy Cruise from Moody's Analytics remains hopeful that the stimulus measures introduced could still help achieve the 5% target, although he emphasizes the necessity of addressing deeper structural issues within the economy.Adding to the economic woes, September figures revealed a significant drop in new home prices—the sharpest decline seen in nearly ten years—as the property sector continues to hinder growth. Lynn Song, chief economist for greater China at ING, notes, "The property market unsurprisingly remains the biggest drag on China's growth," highlighting the connection between property stability and overall economic recovery.Efforts to combat these challenges include a recent meeting convened by the People's Bank of China (PBOC) to urge lending boosts from banks, coinciding with the unveiling of the nation's largest stimulus package since the pandemic. While the government is actively rolling out measures to support growth, lingering issues, particularly in consumer confidence and the broader property market, continue to present notable obstacles for the world’s second-largest economy.
