Growth target in China’s reach
Third quarter GDP up 6.7%
CHINA’S economic growth remains stable in the third quarter, all but ensuring the government’s full-year growth target is met and opening a window for policymakers to deliver on vows to rein in excessive credit and surging property prices.
Gross domestic product rose 6.7 percent in the third quarter from a year earlier, matching the median projection by economists surveyed, and smack in the middle of the government’s 2016 goal of 6.5 percent to 7 percent growth.
Services industries paced the expansion in the first nine months of the year, expanding 7.6 percent.
Stabilising growth gives room for policies aimed at containing swelling leverage and curbing excessive financial risks, with International Monetary Fund researchers among those calling for such efforts.
The government released guidelines last week for reducing debt, yet past pledges have often been ignored as rampant credit growth fuels surging house prices in the nation’s biggest cities.
“It’s amazing what a housing bubble and crazy debt increases can achieve,” said Michael Every, the head of financial markets research at Rabobank in Hong Kong. “This is not sustainable – but then the alternative is nothing anyone wants to think about.” Continuing shift Releases for September showed the continuing shift in China’s economy toward consumer spending, with retail sales gains outpacing the rise in industrial production. Investment spending continues to be led by the public sector, the figures showed, with subdued private business spending highlighting the problem of high levels of debt. September data showed: Industrial output rose 6.1 percent from a year earlier, against the median forecast for 6.4 percent.
Retail sales gained 10.7 percent, matching the median forecast.
Fixed asset investment increased 8.2 percent for January to September, matching the forecast. State firms drove the gain, with a 21.1 percent jump in investment, while private investment advanced 2.5 percent.
The fiscal deficit doubled in September to 861 billion yuan (R2 trillion) from a month earlier as the government moved to support growth.
“Despite continued disappointing growth in the rest of the world economy, China’s economy is on track to achieve the government’s indicative growth targets for the year,” said Bert Hofman, the World Bank’s director for China, Mongolia and Korea in Beijing. “With projected continued modest growth in the rest of the world, the question is what the right balance is between support for demand growth, rising risks from growing leverage and the pace of structural reforms to improve productivity.” – Bloomberg