China’s economy is expected to have slowed in the third quarter, dragged by a prolonged housing downturn and weak consumption, keeping pressure on policymakers who are considering further stimulus measures to revitalize growth.
Data released on Friday is expected to show the world’s second-largest economy grew 4.5% year-on-year in the July-September period, slowing from 4.7% in the second quarter and hitting its weakest pace since the first quarter of 2023, according to a Reuters poll.
Beijing will report the latest figures at a time when authorities have begun sharply increasing stimulus measures in a bid to ensure the economy reaches the government’s 2024 growth target of around 5%.
The Reuters poll showed China’s economy will likely expand 4.8% in 2024, below Beijing’s target, and growth could cool further to 4.5% in 2025.
China’s economy has seen uneven growth this year, with industrial production outpacing domestic consumption, fueling deflation risks amid the housing crisis and rising local government debt.
Policymakers, who have traditionally looked to infrastructure and manufacturing investment to drive growth, have pledged to shift focus towards stimulating consumption, but markets await further details on the expected fiscal stimulus package.
On a quarterly basis, the economy is expected to have expanded 1.0% in the third quarter, compared with 0.7% growth in the April-June period, the survey found.
GDP data is due at 0200 GMT on Friday. Separate September activity data is expected to paint a mixed picture, with a recovery in retail sales and a slowdown in investment.
Recent data has raised the risk of China slipping into a phase of entrenched deflationary pressures, as the outlook for exports, the economy’s only bright spot this year, appears to dim due to restrictions on foreign trade.
China’s export growth slowed sharply in September, while imports also decelerated, undershooting forecasts by wide margins and suggesting producers are cutting prices to shift inventories ahead of tariffs from several partners commercial.
China’s consumer inflation unexpectedly narrowed in September as producer price deflation deepened, increasing pressure on Beijing to take steps to stimulate demand as exports lose steam.
Last week, China’s finance minister pledged to “significantly increase” debt to boost growth, but left investors wondering the overall size of the stimulus package.
China could raise another 6 trillion yuan ($842.60 billion) from Treasury special bonds over three years to help support the ailing economy through an expansion of fiscal stimulus, Caixin Global reported, citing multiple sources familiar with the matter.
Reuters reported last month that China plans to issue special sovereign bonds worth about 2 trillion yuan this year as part of a new fiscal stimulus.
In late September, the central bank announced its most aggressive monetary support measures since the COVID-19 pandemic, including interest rate cuts, a 1 trillion yuan liquidity injection and other measures to support real estate markets and equity.
Analysts polled by Reuters expect a 20 basis point cut in China’s one-year prime lending rate, the benchmark lending rate, as well as a 25 basis point cut in banks’ reserve requirement ratio in the fourth quarter.
(1 dollar = 7.1208 Chinese yuan renminbi)
