China Faces Economic Slowdown Amidst Stimulus Efforts
China has reported its slowest economic growth in 18 months, with a year-on-year increase of only 4.6% in the third quarter of 2024, down from 4.7% in the previous quarter. This decline, noted by the National Bureau of Statistics (NBS), marks the slowest growth rate since early 2023, when the country was recovering from strict lockdowns due to the COVID-19 pandemic. Analysts had anticipated a slightly lower growth rate of 4.5%, indicating that while the economy is struggling, it performed marginally better than expected.
Challenges in Consumer Spending and Property Sector
The economic slowdown is largely attributed to weak consumer spending and ongoing challenges in the property sector, raising concerns about potential deflation. The consumer price index for September fell short of expectations, highlighting the persistent issue of weak demand. Although the Chinese government has introduced measures such as interest rate cuts and eased restrictions on home purchases, there remains a significant demand for clarity on fiscal plans and the transition towards a more sustainable consumption model. Zhuyue Zhang, chief economist at Pinpoint Asset Management, emphasized the need for more detailed fiscal stimulus plans, suggesting that investors may need to wait until November for further announcements.
Government's Commitment to Growth Targets
In response to the economic challenges, Chinese officials have ramped up stimulus measures since late September, expressing confidence in achieving the government's 5% annual growth target through supportive policies and potential cuts in bank reserve requirements. However, market optimism regarding these stimulus efforts has begun to wane, as investors seek a clearer roadmap for restoring long-term economic resilience. Despite the government's commitment, experts indicate that more direct financial stimulus will be necessary to revive economic activity and restore consumer confidence.
