China’s latest signs of ‘stable growth’ will not quell investors’ long-term fears, say economists
Beijing tipped to publish another 6.7 per cent of headline growth this week, but concerns remain over country’s debt, yuan and lack of new growth engines
China’s third-quarter economic data on Wednesday might paint a picture of stable growth in the world’s second biggest economy, but the figures will not dissuade investors from worrying about the indebted country’s future, economists warn.
Immediate risks of an hard landing have abated thanks to government-backed spending, but Beijing’s structural problems of excessive capacity, ballooning debts and the absence of new growth engines are worsening, making it harder for the Chinese leadership, headed by President Xi Jinping, to manage.
Despite a headline growth rate above 6.5 per cent, investors are finding few areas to place their money. Instead they have rushed to buy properties in big cities, or simply remitted funds abroad.
“I am not worried about a short-term headline GDP [gross domestic product] figure as the current momentum of a firmer footing of economic growth may not fade immediately,” said Zhao Hao, an economist at Commerzbank in Singapore. “Yet, for the long-term, China still lacks new growth propellers.”
China’s state statistics agency is scheduled to release a flurry of economic data on Wednesday, including the third-quarter GDP as well as investment, retail, and industrial production for September.