Economy stabilizes with 6.7% growth in Q3
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E-mail China.org.cn, October 27, 2016
The Chinese economy expanded 6.7 percent in the third quarter, showing signs of stabilization, despite facing the challenges of deleveraging.
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China's economy steadies in the third quarter, with GDP growth staying flat at 6.7 percent. |
The Q3 growth remained flat compared to the first half of the year, still within the annual growth rate target of 6.5 to 7 percent set by the Chinese government.
Growth well on track
"General economic performance was better than expected, making progress and improving in quality," said Sheng Laiyun, spokesperson with the National Bureau of Statistics (NBS).
Other main economic indicators also confirmed the stabilization of the world's second largest economy.
In the first three quarters, China's value-added industrial output increased by six percent year-on-year, the same level compared to the first half of the year, largely supported by strong performance in the high-tech and equipment manufacturing sectors.
Fixed-asset investment in the first three quarters rose by 8.2 percent year-on-year, thanks to increased investment in infrastructure and real estate.
Private investment rebounded after weak growth in the previous two quarters, rising by 2.5 percent in the first three quarters.
Retail sales grew 10.4 percent year-on-year in the first three quarters, showing robust domestic consumer demand.
As China is pressing ahead with its growth model reform from an investment-led economy to a consumption-led one, consumption contributed a stunning 71 percent of economic growth, up 13.3 percentage points compared to same time last year.
Meanwhile, the tertiary sector grew 7.6 percent year on year in added value, the fastest among all sectors.
According to Sheng, China is making substantial progress in completing the five key tasks of supply-side reform, but more efforts are needed to upgrade economic structure.
The better than expected economic data has led to a higher forecast for China's whole-year GDP growth. Many economists said the country will be able to achieve its growth target of 6.5 to 7 percent this year.
"We will now raise our 2016 real GDP growth forecast by 0.1 percentage point to 6.6 percent from 6.5 percent, as Q3 growth was stronger than we expected," said Zhao Yang, chief China economist with Nomura International (Hong Kong) Ltd.
Challenges ahead but risks under control
While external demands remain weak, surging bank lending has become one of the main factors supporting China's economic stabilization. However, it also poses risks for debt control.
China's red-hot real estate market has caused new loans to jump again in September, with housing loans to individuals accounting for a big share.
China's home sales rose 43.2 percent in the first nine months compared to the same period in 2015. Medium to long-term household loans, most of which can be counted as mortgages, accounted for 60 percent of new loans last quarter, up from 47 percent in the second quarter and 23 percent in the first.
In an effort to rein in increasing house prices, a dozen of cities have rolled out restrictive measures over the past few months, including higher mortgage down payments and greater home purchase restrictions.
These steps have caused concerns over whether China can manage to balance debt control and economic growth.
The property market restrictions are timely and effective and aim to stem speculative purchases while supporting real demand, with limited impact on the economy, Sheng said.
This round of property tightening will unlikely drag down the headline growth as sharply as we saw from 2010 onwards, as housing investment has remained lukewarm in the past few quarters despite soaring property prices, said Zhou Hao, senior emerging markets economist at Commerzbank, in a research note.
According to Sheng, the real estate industry contributed eight percent of total GDP growth in the first three quarters.
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