China Q3 GDP growth slows to 4.8% y/y, in line with forecast

(Reuters) -China’s economic growth slowed to the weakest pace in a year in the third quarter, matching expectations, as a prolonged property slump and trade tensions hurt demand, keeping pressure on policymakers to roll out more stimulus to shore up momentum.

Data on Monday showed gross domestic product (GDP) grew 4.8% in July-September, slowing from 5.2% in the second quarter and in line with analysts’ expectations in a Reuters poll for a rise of 4.8%.

KEY POINTS

* Q3 GDP +4.8% y/y (f’cast +4.8%, Q2 +5.2%)

* Q3 GDP +1.1% q/q s/adj (f’cast +0.8%, Q2 +1.0% revised)

* September industrial output +6.5% y/y (f’cast +5.0%, August +5.2%)

* September retail sales +3.0% y/y (forecast +3.0%, August +3.4%)

* January-September fixed asset investment -0.5% y/y (forecast +0.1%, January-August +0.5%)

* January-September property investment -13.9% y/y (January-August -12.9%)

COMMENTARY

KYLE RODDA, SENIOR FINANCIAL MARKETS ANALYST, CAPITAL.COM, MELBOURNE:

“Better than expected but still underwhelming. Domestic activity remains weak and investment was sluggish too, suggesting more needs to be done to boost demand. Ultimately, the story is the same: an economy that is recovering from the post-pandemic slump, but with very little momentum.”

ALEX LOO, FX AND MACRO STRATEGIST, TD SECURITIES, SINGAPORE:

“It is likely that Beijing will meet its growth target for 2025 of ‘around 5%’. The impressive growth record year-to-date suggests little need for more fiscal stimulus at this juncture and Beijing would probably take a hard-line stance in pressing the U.S. to roll back its technology curbs in any potential trade deal. As the Fourth Plenum is underway, we expect USD/CNY to stay in a tight range as the People’s Bank of China (PBOC) ensures volatility is kept at a minimum during these big political events.”

TONY SYCAMORE, ANALYST AT IG, SYDNEY:

“Given everything that’s going on… my initial read is it’s a decent number.

“I don’t expect there will be any broad-based stimulus measures. I know we’ve got the fourth plenum and I don’t expect there to be anything too significant. From now, we are going to continue to see targeted additional fiscal stimulus. There’s probably an idea that the quarter-three GDP number will be the low point in this cycle and that they can try with that additional targeted stimulus. You know the anti-involution, all the rest of those measures to potentially get the Chinese economy back on a firmer footing into year-end.”

LI HAO, RESEARCH DIRECTOR, CYPRESS INVESTMENT MANAGEMENT, BEIJING:

“Third-quarter GDP growth was in line with expectations. At this stage, achieving the full-year growth target of 5% doesn’t appear too difficult, assuming no major geopolitical or macroeconomic shocks. While short-term policy support may not exceed expectations, medium- to long-term efforts to stimulate domestic demand must continue.

“September data shows the underlying economic structure remains unchanged. Domestic demand is still weak, with investment and consumption falling short of forecasts. Meanwhile, resilient exports suggest front-loading of overseas orders is still driving factory activity.”

DAN WANG, CHINA DIRECTOR, EURASIA GROUP:

“The market understanding was that China is going to miss the target, no matter what. Even with stimulus, it was going to be below 5%. But judging by the figure for the first three quarters, it’s going to hit the target, suggesting China can withstand any pressure from the U.S., even with such levels of tariff threats and export restrictions. Beijing is sending the signal that it is capable of reaching its development goals and is strongly committed to its policies.”

TIANCHEN XU, SENIOR ECONOMIST, ECONOMIST INTELLIGENCE UNIT, BEIJING:

“Q4 will be structurally different, heavy in investment and light in consumption. After all, negative investment growth is not something policymakers want to see. Supportive measures rolled out since September like policy finance tools and the front-loaded government bond issuance are directed towards public investment projects.”

ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT:

“China GDP growth slowed further in Q3. The fixed asset investment growth turned negative year-to-date, which is rare and alarming. The Ministry of Finance announced the RMB 500 billion stimulus on Friday. It should help to mitigate the downward pressure on investment in Q4. Nonetheless, the risk to GDP growth in Q4 is likely on the downside.”

BACKGROUND

* China’s economy has steadily lost momentum following a strong start to the year, weighed down by a prolonged property slump, weak consumption and trade tensions.

* Trade friction with Washington has intensified after China expanded its rare earth export controls, prompting a threat from U.S. President Donald Trump to raise tariffs by an additional 100% starting November 1.

* However, U.S. officials have signalled that both countries were prepared to lower the temperature in their tariff spat.

* China has rolled out modest support measures this year to preserve policy space for future shocks, taking advantage of resilient exports and strong stock markets.

* China’s heavy reliance on manufacturing and overseas demand has made it vulnerable to external shocks. Exporters are already feeling the impact of higher U.S. tariffs imposed earlier this year.

* While China’s export growth rebounded in September, much of the recent data shows the world’s second-largest economy has lost momentum.

* China’s economy is projected to grow 4.8% this year, below the official target of around 5%, according to a Reuters poll. Growth is expected to ease further to 4.3% in 2026.

(Reporting by Reuters Asia bureaus; Compiled and edited by Subhranshu Sahu)

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