China's economic growth slows to more than five-year low
China's economy grew at its slowest pace since the global financial crisis, causing speculation the government may introduce more stimulus measures. Gross domestic product rose by 7.3% in the third quarter from a year earlier, compared to 7.5% in the previous quarter, official data showed. The figure beat market forecasts for 7.2% growth but still marked its weakest performance since March 2009.
Industrial production also came in better than analyst estimates. Manufacturing output rose 8% in September against a year earlier. However, fixed asset investment and retail sales missed expectations.
China's National Bureau of Statistics said retail sales increased 11.6% from a year earlier, compared to forecasts for 11.7%. Continue reading the main story Analysis image of Martin Patience Martin Patience BBC News, Beijing.The slowdown would have been worse had it not been for a mini - stimulus to bolster the world's second largest economy. China's leaders are trying to boost domestic consumption and end the economy's reliance on exports and investment for growth. But any major slowdown could lead to rising unemployment, potentially triggering social unrest. Fixed-asset investment excluding rural households rose 16.1% in the first nine months from a year earlier, below analyst estimates for a 16.3% increase. Overall, the figures show that growth continues to slow in the world's second-largest economy, raising concerns it may have knock-on effects on the strength of the global recovery.
"China's slowdown comes several years after corrections began in other emerging markets," Bill Adams, senior international economist for PNC Financial Services Group, said.
"As long as China keeps trending slower like this, it will be difficult for global commodity prices to rise, a persistent headwind for commodity producers like Brazil and Australia."
More stimulus?
China's government aims to achieve 7.5% economic growth this year, but many analysts believe that they will not be able to meet that target. There is also speculation the government may take more steps to boost growth. Continue reading the main story. “Start Quote We don't think policymakers will panic as a result of the slowdown”
Julian Evans-Pritchard Capital Economics
Beijing recently unveiled measures aimed at stimulating more consumer spending, including relaxing its limits on home purchases and injecting billions of dollars into its biggest banks.
China's central bank also cut the interest rate it pays lenders for 14-day repurchase agreements last week. Julian Evans-Pritchard, China economist at Capital Economics, believes problems in the property sector have dragged on growth, but that overall, the broader economy remains "healthy".
"We don't think policymakers will panic as a result of the slowdown given that it remains highly concentrated in a few sectors suffering from overcapacity," he said. "The upshot is that although growth has slowed, it reflects a welcome rebalancing away from excess investment in certain sectors of the economy and is not cause for significant concern."
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The global financial crisis affected the growth of the Chinese economy slows down, causing speculation made by the Chinese government stimulus measures to boost the cost and extend the limits. To buy a home and infusion of billions of dollars into the economy. Consequently Although growth has slowed, it reflects the balance of hospitality from the excess investment in some sectors of the economy and did not pose a significant concern at all.
Softening China's growth target
China's Premier Li Keqiang, Finance Minister Lou Jiwei and others have laid the groundwork over the past year to soften the growth target for GDP that has been in place since the first Five Year Plan under central planning over half a century ago.
While reiterating that the government's growth target of 7.5% can be met, the phrase "around" has been added to the target in various speeches and a range of 7.2-7.3% growth has been mentioned as being sufficient to meet the goal of creating jobs. The latest growth figure is in that range. In the third quarter, China grew at 7.3%. It is the slowest pace since the first three months of 2009 during global recession, but faster than what economists were forecasting at 7.2%.
As compared with the second quarter of the year, GDP expanded by 1.9% which is slower than Q2 at 2% but above the 1.8% forecast. Li Keqiang has said before that growing at 7.2% would create 10 million jobs per year, which is needed for the record 7 million Chinese graduates each year. But, of course, it's the quality of the jobs that will matter too.
Growth quality
On that front, how is the re-balancing of the economy coming along?
September's factory output is up 8% from a year earlier and has recovered some ground from the 2008 low hit in August.
It's consistent with 31 months of deflation or falling producer prices and consumer inflation slowing to just 1.6%, the lowest since the 2008 global crisis.
Consumption continues to hold up and has exceeded 48% of GDP for the first time.
A Chinese shopper China's government has been trying to encourage more consumer spending
For a country at this level of development, consumption is usually around half of GDP, so there are signs of re-balancing toward consumers and developing the services sector.
Correspondingly, retail sales have grown by 11.6% from a year earlier, while fixed asset investment rose by over 16% in first nine months of the year.
The pace of investment has gradually slowed; 2013 had registered nearly 20% growth.
“Start Quote
It's unsurprising that the Chinese government has been quietly supporting the economy by easing bank lending”
With concerns over slowing price and growth, it's unsurprising that the Chinese government has been quietly supporting the economy by easing bank lending.
But, of course, that won't help raise the quality of growth that been too reliant on real estate and credit.
In the longer term, cementing the institutions to lay firm foundations for that market will be important.
Reforming the rule of law is the aim of the Fourth Plenum, the high level meeting of Chinese officials taking place in Beijing this week. That may ultimately prove to be more significant than the quarterly GDP release.
But, at a time where global markets are in turmoil, interpreting the short-term prospects of the world's second-largest economy will undoubtedly take on greater importance.
Summary
Great Depression Result in deflation and inflation, the price decreased is slowing down. After the economic downturn passes. Factory with increased productivity And reduce of bank lending. But reducing the lending banks can not increase the quality of growth. The lay the foundation of steady marketing and reform the rule of law. major the aim to develop the country to grow with quality.
Targeted GDP of growth in China. Lou jiwei is prime mention China's economy in the past year in each quarter, GDP levels of global economic downturn. As a result, the country's GDP growth of the economy in each country reduced. After the global economic downturn, the country is still at 7.2% of GDP, higher than the expected. It also plans to create 10 million jobs per year. To enough jobs for new graduates graduate China will improve the quality of people in the country.