China eco­nomic growth holds steady

Jamaica Gleaner - - BUSINESS - – AP

CHINA’S ECO­NOMIC growth held steady in lat­est quar­ter, shored up by a bank lend­ing boom and con­sumer spend­ing while trade weak­ened.

The world’s sec­ond-largest econ­omy grew by 6.7 per cent in the three months end­ing in Septem­ber com­pared with a year ear­lier, data showed Wed­nes­day. That was in line with the two pre­vi­ous quar­ters and bet­ter than some fore­cast­ers ex­pected.

“Eco­nomic ac­tiv­ity seems to be hold­ing up rea­son­ably well, with few signs that a re­newed slow­down is just around the cor­ner,” said Ju­lian Evans-Pritchard of Cap­i­tal Eco­nom­ics in a re­port.

Still, an­a­lysts cau­tioned growth is likely to slow next year be­cause the lat­est strength is based in part on a surge in bank lend­ing and real es­tate prices — both of which reg­u­la­tors see as a risk and are try­ing to re­strain.

China’s econ­omy has cooled Chi­nese Pres­i­dent Xi Jin­ping. steadily over the past six years as com­mu­nist lead­ers try to steer it to more self-sus­tain­ing growth based on con­sumer spend­ing in­stead of trade and in­vest­ment.

An un­ex­pect­edly sharp slow­down over the past two years prompted fears of po­lit­i­cally dan­ger­ous job losses. Bei­jing launched mini-stim­u­lus mea­sures with higher spend­ing on con­struc­tion of high­ways and other pub­lic works.

Ex­ports have con­tracted this year due to weak global de­mand but re­tail sales, es­pe­cially e-com­merce, are grow­ing faster than the over­all econ­omy.

HEALTHY PACE

Re­tail sales rose 10.4 per cent in the first three quar­ters, up 0.1 per­cent­age point from the first half, ac­cord­ing to the Na­tional Bu­reau of Sta­tis­tics. Growth in ser­vice in­dus­tries over­all, boosted by a surge in real es­tate sales, ac­cel­er­ated to 7.5 per cent from the pre­vi­ous quar­ter’s 7.8 per cent.

By con­trast, ex­ports shrank by 5.6 per cent in Septem­ber from a year ear­lier.

“Third-quar­ter data sig­nalled that eco­nomic growth has sta­bilised at a healthy pace, and that China’s tran­si­tion from a high-speed, heavy in­dus­try-based econ­omy to a mod­er­ately fast con­sumer and ser­vices-based econ­omy is well un­der way,” said Andy Roth­man of Matthews Asia in a re­port.

“The chal­lenges of com­plet­ing this tran­si­tion will re­sult in grad­u­ally slower growth rates and in­creased volatil­ity, but the risks of a hard land­ing are very low.”

State me­dia have warned China’s eco­nomic out­look will be ‘L-shaped’, mean­ing the down­turn should bot­tom out but growth will not re­bound to the dou­ble-digit rates of the past decade.

Re­peated in­fu­sions of credit to prop up growth since the 2008 global cri­sis has led to a rapid run-up in China’s debt to the equiv­a­lent of 250 per cent of gross do­mes­tic prod­uct. That has prompted warn­ings the coun­try could face a fi­nan­cial cri­sis if debt growth isn’t con­trolled.

The cen­tral bank’s mea­sure of to­tal credit showed growth in Septem­ber edged up to 11.3 per cent com­pared with a year ear­lier, up from Au­gust’s 11.2 per cent rate.

“The re­cent re­cov­ery is ul­ti­mately on bor­rowed time given that it has been driven in large part by faster credit growth and a property mar­ket boom,” said Evans-Pritchard. “As the boost from pol­icy stim­u­lus be­gins to wear off, prob­a­bly at some point early next year, con­tin­ued struc­tural drags mean the econ­omy is set to be­gin slow­ing again.”

AP

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