– New normal –
The NBS also said industrial production, which measures output at factories, workshops and mines, rose 8.0 percent year-on-year in September, against a more than five-year low of 6.9 percent in August.
“This is encouraging, as of all the monthly data, industrial production has the strongest correlation with GDP growth, so this bodes well for an economic recovery this quarter,” Nomura economists wrote in a reaction note to Tuesday’s data.
Retail sales, a key indicator of consumer spending, expanded 11.6 percent, while fixed asset investment, a measure of government spending on infrastructure, rose 16.1 percent on-year in the first nine months.
However, Liu Dongliang, of China Merchants Bank, said the GDP figure was “a result of multi-rounds of mini-stimulus measures, showcasing that the pressure of the economic downturn is still relatively high”.
Authorities have since April used a series of measures to underpin growth, on a far smaller scale than the 4.0 trillion yuan (now $660 billion) stimulus of 2008 introduced to battle the effects of the global financial crisis.
Beijing has so far used targeted cuts in reserve requirements – the amount of funds banks must put aside – as well as a 500 billion yuan injection into the country’s five biggest banks for re-lending.
Analysts are divided over whether the central People’s Bank of China might resort to an across-the-board reserve requirement cut or even slashing interest rates.
The government still has weapons in its arsenal, including greater infrastructure spending and tax cuts, while easier mortgage lending polices announced last month could take the sting out of falling housing prices, they say.
Declines in average new home prices in 100 major cities accelerated in September, dropping for the fifth straight month, the most recent figures show.
But leaders have indicated that lower growth is the new normal as they carry out long-awaited economic reforms and transform the country’s growth model to one driven by consumer, rather than investment.
“The upshot is that although growth has slowed, it reflects a welcome rebalancing away from excess investment in certain sectors of the economy and is not cause for significant concern,” Julian Evans-Pritchard, China economist at Capital Economics, said in a note.
“With policymakers now prioritising employment and economic rebalancing over growth, we don’t think they will feel the need to act aggressively to shore up the economy in response to today’s data.”
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