China’s GDP grows 4.8% from January to September and approaches the government’s target

China’s economy continued to expand in the third quarter of 2024, with a 4.6% increase in Gross Domestic Product (GDP) compared to the same period of the previous year, according to data released by China’s National Bureau of Statistics. Although the result was lower than the 4.7% of the previous quarter and below the annual target of “around 5%” established by the government, it exceeded the expectations of analysts, who predicted more modest growth. Other official indicators, such as retail sales and industrial production, also surprised positively, suggesting that the Chinese economy may be recovering, albeit timidly.

In September, industrial production rose 5.4% compared to the previous year, and sales of household appliances and electronics registered a significant increase of 20.5%, driven by government subsidies for exchanges of old products. These stimuli are part of a series of measures announced by Beijing in recent weeks to encourage growth. Among them, the biggest economic stimulus package since the pandemic stands out, including significant cuts in interest rates and mortgages, as well as incentives to increase lending and investment in the stock market.

Despite the measures adopted, the real estate sector remains a significant source of concern. New home prices fell at the fastest pace in nearly a decade in September, reflecting a slowdown in the sector. For Lynn Song, chief economist for China at ING, “the housing market remains the biggest obstacle to growth”. She notes that until housing prices and inventories stabilize, the sector will continue to be a drag on the economy.

The Chinese government has acted to minimize the impacts of this decline. The People’s Bank of China (PBOC) implemented a program to encourage non-bank financial institutions to invest in the stock market, which helped lift the CSI 300 index on the Shanghai and Shenzhen exchanges by 3.6%. Furthermore, the Chinese government hopes that the issuance of public bonds and fiscal stimuli, such as the recent rate cut package, will help recover investment in fixed assets and boost domestic consumption.

However, China’s economic recovery faces structural challenges such as sluggish domestic consumption, a slowing property market and unfavorable demographics. Harry Murphy Cruise, an economist at Moody’s Analytics, highlighted that the stimulus measures “will likely help the economy reach the 5% growth target for the year”, but warned that further structural reforms will be needed to ensure sustained long-term growth. .

Chinese growth was also compared to the performance of other major economies. In the second quarter of 2024, the United States’ GDP grew 3.0%, while Japan recorded an expansion of 2.9% in annualized terms, showing that although its growth pace has been more moderate in recent months, China still stands out among the largest global economies.