China's Q3 GDP Up 4.8% Year-on-Year... Lowest Growth Rate of the Year (Summary)

Growth Target of "Around 5%" Falls Short

In the third quarter of this year, China's economy recorded its lowest growth rate of the year.

On October 20, the National Bureau of Statistics of China announced that the country's gross domestic product (GDP) grew by 4.8% year-on-year in the third quarter.

Nanjing Port, Jiangsu Province, China. Photo by AFP Yonhap News

This figure represents a significant decrease from the previous quarter's 5.2%, although it slightly exceeds the 4.7% forecast by analysts surveyed by Bloomberg. It is in line with the forecast compiled by Reuters.

The Chinese authorities have set the annual GDP growth target at "around 5%." China maintained a growth rate in the 5% range for three consecutive quarters-5.4% in the fourth quarter of last year, and 5.4% and 5.2% in the first and second quarters of this year, respectively-before falling back into the 4% range.

The cumulative growth rate for the first three quarters of this year is 5.2%.

In September, retail sales (consumption) and industrial production increased by 3.0% and 6.5%, respectively, compared to the same period last year. While retail sales met expectations, it was the lowest figure since November of last year. Industrial production, on the other hand, significantly outperformed the expected 5%, showing strong growth.

Fixed asset investment from January to September decreased by 0.5% compared to the same period last year, marking the lowest level since 2020. This is a deterioration from the January to August figure (0.5%) and falls short of the Reuters forecast (0.1%).

Real estate development investment from January to September dropped by 13.9% year-on-year, widening the decline compared to the January to August figure of -12.9%.

The national average urban unemployment rate in September was 5.2%, a decrease of 0.1 percentage point from the previous month (5.3%). The average urban unemployment rate for January to September was 5.2%, the same as for January to August.

Despite a recent boom in exports, China's growth rate has declined due to sluggish domestic consumption and investment. Previously released data showed that China's exports in September increased by 8.3% year-on-year. There are also concerns about deflationary pressure (falling prices amid economic slowdown), continued weakness in the real estate sector, and fears of self-destructive competition among companies.

However, Dan Wang, China Director at Eurasia Group, noted, "The market believed that China would not be able to achieve its target (around 5%) under any circumstances. Looking at the figures for the first three quarters, achieving the target now seems highly likely. This demonstrates that China can withstand pressure from the United States, such as high tariffs and export restrictions."

Reuters reported that Chinese authorities have implemented relatively moderate stimulus measures this year, supported by robust exports and a strong stock market. While there is an assessment that there is still room for additional stimulus, opinions are divided on whether the authorities will actually take further action within the year.