CHINA’S THIRD-QUARTER GDP growth number, at a 7.3% year-on-year, was a tad better than expectations, though not sufficiently so to prevent gloomy headlines about it being the slowest growth since the global financial crisis of 2008.
Fears that growth was slowing too quickly can be set aside for now. The selective stimulus applied earlier in the year is starting to work its way through the economy. Policymakers will likely feel that they will need only the lightest of hands on the monetary tiller in the fourth quarter to hit the officially fudged growth target of about 7.5%
One important sign of stabilization is a pick-up in industrial production. Manufacturing output was up 8% year-on-year in September, after August’s abrupt slowdown to 6.9% growth. Fixed asset growth slowed to 16.1% from 16.5% in August, a reflection of the sluggish real estate market, though the national figure conceals a two-track property slowdown at the city level.
The black cloud is that retail sales’ year-on-year growth slowed to 11.6% in September from 11.9% in August, suggesting that little progress is being made towards rebalancing the economy towards greater domestic consumption. It is that that is needed most to ensure China is safely on the long glide path to slower but more sustainable long-term growth.