Chinese economy stabilises as growth picks up
Third-quarter expansion was below target but output and retail were up, easing the pressure on Beijing to bring in more stimulus measures
Mainland China's economic expansion slowed to a 14-quarter low in the third quarter, but economists say the worst may be over and another round of aggressive stimulus is unlikely with the improvements seen in recent months.
Gross domestic product grew 7.4 per cent in the July-September period from a year ago, the National Bureau of Statistics said yesterday.
It was in line with what many economists had anticipated and slower than the second-quarter figure of 7.6 per cent.
Industrial output, retail sales and fixed-asset investment all improved last month from August, spurring hope that the economy may be bottoming out.
"The Chinese economy has stabilised and improved moderately as the impact of moderate policy easing begins to show," said Zhu Haibin, an economist at JP Morgan Chase Bank. "The likelihood of any significant stimulus is on the low side."
The Shanghai Composite Index rose 1.24 per cent yesterday, while the Hang Seng Index climbed 0.48 per cent. The yuan strengthened 0.07 per cent to close at 6.2503 to the US dollar in Shanghai yesterday, the strongest in 19 years.
The country has targeted a growth of 7.5 per cent for the full year. In the first three quarters, the economy expanded 7.7 per cent year on year.
Sheng Laiyun, spokesman for the statistics bureau, forecast the economy to "continue the stabilising trend in the fourth quarter or even stage a mild recovery".
Premier Wen Jiabao said the central government had made stabilising economic growth a higher priority task.
In September, industrial output gained 9.2 per cent year on year, compared with the growth of 8.9 per cent in August. Electricity production was up 1.5 per cent from a year ago.
Fixed-asset investment growth recovered to 20.5 per cent in the first nine months, up from 20.2 per cent in the first eight. Growth in infrastructure investment accelerated to 12.6 per cent in the nine months to September.
Retail sales value rose 14.2 per cent last month, compared with 13.2 per cent in August. Car sales grew 1.7 per cent year on year while that of furniture surged 31.4 per cent and construction materials soared 26.9 per cent.
Sales of household electronics rose 13.7 per cent.
Yu Song, an economist at Goldman Sachs Gao Hua Securities, said the September data showed a "genuine rebound" but there are some uncertainties "in the magnitude of the rebound and sustainability".
It was the result of domestic policy loosening, stronger export growth and holiday distortions.
"Better growth data tends to reduce the urgency policymakers feel about the need to continue to loosen policy. Thus the sustainability of the recovery will to a large extent rest on external demand," Yu said.
Yao Wei, China economist at Societe Generale, said: "As the bottoming out is largely confirmed, the chance of another interest-rate cut by the year-end is probably close to zero … there is certainly no rush to announce an investment stimulus package."