China’s economy grew by 4.6% in the third quarter of 2024 compared to the same period in 2023. This growth rate, while significant, marks the slowest pace since the first quarter of 2023. The Chinese government has set an annual growth target of about 5%, which now seems challenging to achieve.
Industrial production increased by 5.4% in September compared to the previous year, surpassing the 4.5% growth in August. Retail sales, a key indicator of domestic consumption, rose by 3.2% year-on-year in September, up from 2.1% in August.
Fixed asset investment grew by 3.4% in the first three quarters of 2024, matching the growth rate from January to August. This steady growth suggests ongoing economic activity despite challenges.
The real estate sector continues to face difficulties. New home sales by value fell 24.0% in the first nine months of 2024 compared to the previous year. New construction starts decreased by 22.2% during the same period. Real estate investment by developers dropped 10.1% in the first three quarters.
Beijing has implemented a series of pro-growth measures to boost the economy. These include cutting interest rates, reducing mortgage costs, and providing financial support to struggling property developers. However, some analysts argue that these measures may not be sufficient to fully restore consumer and business confidence.
China’s exports, previously a bright spot, have cooled significantly as external demand weakens and more countries impose trade barriers on Chinese products. This development adds pressure to the country’s economic outlook.
While the government has signaled plans to increase fiscal stimulus in the coming months, experts suggest that direct cash transfers to households or increased social welfare spending to boost consumption may not be forthcoming. The economy’s future trajectory will depend on the effectiveness of current measures and potential additional policy actions.
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