China's Q3 Growth Rate Expected to Return to 4% Range... Consumers Also Tighten Wallets

Average 4.5% Forecast by Domestic and Foreign Institutions
1.8%P Drop from Q2
Adverse Factors Including Real Estate and Weather Anomalies
Consumers Also Hesitant to Spend Money

Experts have forecast that China's economic growth rate for the third quarter of this year will fall back to the 4% range. The analysis points to the real estate market crisis, the government's low-intensity policy response, and abnormal weather events as factors leading to the decline in growth rate. Chinese consumers also view the current economic situation negatively and appear hesitant to increase consumption.

On the 11th, Chinese economic media Caixin reported that a survey of GDP growth rate forecasts for the third quarter of this year, conducted among 11 domestic and international institutions, showed an average of 4.5%. This represents a 1.8 percentage point drop from the second quarter (6.3%) and matches the figure for the first quarter (4.5%), when China began its reopening in earnest. The respondents' forecast range was between a low of 4.1% and a high of 5.1%. The actual GDP growth rate will be announced on the 18th.

Wonbin, Chief Economist at Minsheng Bank, who projected a 4.8% growth rate for the third quarter, stated, "The third quarter showed a trend of being the 'lowest point and the beginning of an upward trend' in economic growth." He added, "In July, macro indicators were lower than expected due to adverse factors such as abnormal weather, and economic measures like the reserve requirement ratio (RRR) cut fell short of expectations. However, since last month, positive factors for economic recovery have increased with announcements of interest rate cuts, support for private economic development, and real estate support."

On the other hand, Lu Ting, Chief Economist at Nomura China, said, "Although economic growth stabilized last month, the third quarter's performance is relatively cautious," forecasting the lowest growth rate among respondents at 4.1%. Lu diagnosed that "housing transaction volumes rebounded in first-tier cities, while volumes decreased in lower-tier cities, exacerbating difficulties in the development of third- and fourth-tier cities." He also analyzed, "Although rising international raw material prices have eased deflation, the transition to upstream industries is difficult. After the summer travel peak, the recovery in the service sector slowed, and geopolitical tensions remain."

Lu further noted, "The real estate industry continued to show relative weakness last month, dragging down the growth rate of fixed asset investment." He added, "Short-term infrastructure investment can be supported through special bond issuance, and government industrial policies related to high-tech manufacturing and food safety industries can lead to increased manufacturing investment." He projected the cumulative investment growth rate for the third quarter this year to be 3.1%, a 0.1 percentage point decrease compared to the previous year.

In this survey, economists estimated last month's export growth rate at an average of -7.7% and imports at -5.2%. The trade surplus was expected to be $70.34 billion (approximately 94.33 trillion KRW).

Chinese consumers also expressed a negative outlook on the future economy. According to a survey conducted by Bank of America (BofA) from the 6th to the 8th among 1,023 Chinese consumers, the proportion of respondents expecting wage increases fell from 29% in August to 26% this month. Only 31% of consumers said they would increase consumption within six months, down from 37% in August.

Regarding the real estate market, the proportion of consumers expecting housing prices to decline rose sharply from 27% in August to 40% this month. Despite the Chinese authorities' real estate stimulus policies, the percentage of those planning to purchase a house within six months remained similar to August levels. In this survey, 80% of respondents said they had no plans to buy real estate within six months.

This content was produced with the assistance of AI translation services.