"China to Achieve Target if Growth Exceeds 4.4% in Q4"

Outperforming with Q3 Growth Rate Forecast Surpassed
But Real Estate-Driven Risks Darken Next Year's Outlook

China's statistics authorities stated that if the economy grows by more than 4.4% in the fourth quarter, the government can achieve this year's growth target of around 5.0%.

Sheng Laiyun, Deputy Director of the National Bureau of Statistics of China, said at a press briefing on the 18th, "To achieve the annual target this year, China only needs to grow 4.4% year-on-year in the fourth quarter." Earlier, the National Bureau of Statistics announced that the GDP growth rate in the third quarter was 4.9% year-on-year, exceeding the forecast of 4.4%. After declaring the With-Corona policy at the end of last year, China's growth rates were 4.5% in the first quarter and 6.3% in the second quarter. The cumulative growth rate for this year, including third-quarter statistics, is 5.2%.

[Image source=AFP Yonhap News]

Zhang Ziwei, Chief Economist at Pinpoint Asset Management, told the Hong Kong South China Morning Post (SCMP), "Now the government's focus will shift to next year's growth outlook," adding, "The key will be what targets the government sets and how much fiscal easing will be implemented."

Industrial production in September, released on the same day, increased by 4.5% year-on-year, surpassing the forecast of 4.3%. Retail sales rose 5.5% year-on-year, exceeding both the previous month's figure (4.6%) and the forecast (4.5%). The unemployment rate in September was 5.0%, improving to the lowest level since October 2021 (4.9%). However, the youth unemployment rate (ages 16-24), which reached a peak of 21.3% in June and has not been released since, remains undisclosed.

However, experts assessed that it is difficult to be optimistic due to the downturn in China's real estate market and concerns over domino bankruptcies among developers. Xu Tianchen, Chief China Economist at The Economist Intelligence Unit, diagnosed, "A hard landing in the real estate sector has not occurred," but "it will remain the biggest downside risk in 2024." He added, "Policymakers should not be complacent with positive factors such as a solid industrial sector, improved consumption, and a rebound in global trade."

Harry Murphy Cruz, Economist at Moody's Analytics, pointed out that "China's economic recovery is still in its early stages," noting that real estate investment fell 9.1% year-on-year during the third quarter. He explained, "With no signs of improvement in the worsening real estate market, dark clouds remain overhead," adding, "Direct support to households could be the aspirin needed to overcome debt problems, but such support is becoming increasingly difficult."

Oxford Economics viewed that due to the gap between positive macro data and fragile real estate sentiment, the economic recovery will struggle to gain momentum in the fourth quarter without additional stimulus measures.

Meanwhile, the International Monetary Fund (IMF) lowered its economic growth forecast for China next year from 4.8% to 4.2%. The report urged productivity reforms, stating, "Due to uncertainties in productivity and labor force, China's medium-term potential growth rate will slow."

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