China’s economy grew by only 4.6% in the third quarter, which is slower than expected and below the government’s target of about 5%. This growth rate is the lowest since early last year, as the country struggles to improve its slowing economy, according to the National Bureau of Statistics, as reported by the BBC.
Although this is a decline from the previous quarter, it was slightly better than what some analysts had predicted. Other recent reports on retail sales and factory output also showed better-than-expected results.
In response to the economic slowdown, the Chinese government has introduced various measures to support growth. However, this is the second consecutive quarter where the growth has fallen short of the 5% target, raising concerns among government officials. Eswar Prasad, a former head of the International Monetary Fund’s China division, told the BBC that the government’s growth target now seems seriously at risk. He believes significant stimulus efforts will be needed in the fourth quarter to meet that target.
On a more positive note, Harry Murphy Cruise from Moody’s Analytics thinks that the stimulus measures could help China reach its growth target for the year. However, he warns that more action is needed to tackle the underlying issues in the economy.
The property market continues to be a major challenge for China, with new home prices falling at their fastest rate in almost ten years.
Lynn Song, chief economist for greater China at ING, pointed out that the property sector is the biggest obstacle to economic growth. She explained that recovery in investment is unlikely until housing prices stabilize and inventory decreases.
In light of these challenges, China’s central bank recently called for banks to increase lending to help stimulate growth.
Last month, they announced their largest stimulus package since the pandemic, which included significant cuts to interest and mortgage rates, as well as measures to encourage lending to businesses and individuals.
Overall, the world’s second-largest economy is facing numerous hurdles, including a property crisis and low confidence among consumers and businesses .
Credit : BBC
https://www.bbc.com/news/articles/crr54x00857o