16 September 2019

China GDP growth to rebound to 8% in 1H 2014, economists say

China’s gross domestic product growth is likely to return to the 8 percent level in the first quarter next year amid a stabilizing domestic economy, some economists said, after the statistics bureau on Friday announced a 7.8 percent expansion for the third quarter.

The quarterly performance put the economy on course toward the official 7.5 percent growth target for the year, they said.

The growth for the three months to September eclipsed a 7.5 percent year on year expansion in the preceding three months and a 7.7 percent increase in the first quarter, National Bureau of Statistics (NBS) data shows.

For the first nine months of the year, the economy grew 7.7 percent from the same period last year.

“The economy has re-accelerated modestly and will probably book a similar result in the fourth quarter given the current momentum,” Glenn Levine, an economist at Moody’s Analytics, said in an e-mailed note Friday.

Stimulus measures such as increased rail and utilities investment are helping to stabilize the economy, although the government is aware of worsening imbalances.

Lu Ting, a China economist at Bank of America Merrill Lynch, said the Chinese government “will prevent further quickening of credit growth and will choose not to further expand its mini-fiscal stimulus and will likely tone down its pro-growth rhetoric”.

He expects a small moderation to 7.7 percent growth this quarter on a higher comparison base. A rebound may not be seen “until the first quarter next year to about 7.8 to 8 percent”, he said.

On Friday, NBS spokesman Sheng Laiyun {盛來運} told a press briefing in Beijing that there might be “some pressure” on growth in the fourth quarter due to a higher base last year but said he is optimistic given that the economy has stabilized and begun to show improved quality.

Worries about slowing growth momentum in the fourth quarter resurfaced after the NBS said early this week that inflation edged up to 3.1 percent and fewer growth-supportive measures are in the pipeline.

Retail sales were up 13.3 percent in September from a year earlier after a 13.4 percent expansion in August. Investment in urban fixed assets rose 20.2 percent in the first nine months compared with a 20.1 percent pace in the first half.

Meanwhile, industrial value-added output rose 10.2 percent year on year in September compared with 10.4 percent growth in August, NBS said. 

“As it appears, the Chinese government has reverted to the investment playbook rather than increasing its focus on reform. Industrial production should maintain steady growth pace in the 9 to 10 percent range next year,” Levine said.

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Ayishah Ma is a financial reporter on Greater China issues.