China's third-quarter economic growth stabilized at 6.7%, official data said Wednesday, which was in line with estimates as weaker exports and investments were counterbalanced by a heated housing market.
The pace stands within the government's target of 6.5% to 7% for the full year.
The country's three major economic engines are moving in different directions. Exports and investments showed signs of weakness in recent months, while consumption has contributed more to the growth, said Lian Ping, chief economist at the Bank of Communications.
Export growth slid 10% in September from a year earlier, the biggest drop since February, due to sluggish demand both at home and abroad, even though the yuan depreciated, data from the General Administration of Customs showed.
Growth in fixed-asset investment fell to a 16-year low in the first nine months of the year, at 8.2%. It may not see much improvement for the rest of the year, according to National Bureau of Statistics (NBS) spokesman Sheng Laiyun.
Investment from the private sector, which accounted for more than 60% of fix-asset investment, slowed to its worst pace, at 2.5%, since the NBS started to release data in 2012, as private investors appeared to lose faith in the economy.
While overall investment cooled, the red-hot housing market continued its months-long buying frenzy, expanding faster in August. Sales of new homes grew by 43.2% in the first nine months from a year earlier, far higher than an 18.2% gain in the same period a year before.
The housing market, which showed strong performance in sales in the first three quarters, might cool as 20 local governments rolled out restrictions on home purchases in early October.
Another strength was retail sales in the consumer market, which rose by 10.7% in September, the fastest in 2016, bolstering China's efforts to shift from an investment-driven economy to a consumption-oriented one.
Sales of automobiles and of home renovation materials, fueled by the heated housing market, grew the fastest, by 14.2% and 13.1% respectively. Due to more restrictive policies on down payments and second homes, the housing market is likely to cool. The car market may continue its boom toward the end of the year. But then a rule that cuts in half the taxes charged on cars with engines smaller than 1.6L, which helped ignite the car market, will expire.
Manufacturing also showed strength, highlighted by the Caixin China General Manufacturing Purchasing Managers' Index (PMI), which rebounded to expansion territory in the three months through September. But factories in certain sectors, such as coal mining and steel making, still face the task of trimming excess capacity.
Companies in China are still shouldering debt of $18 trillion, equivalent to around 169% of GDP, according to the most recent figures from the Bank for International Settlements in March. And that figure doesn't even count the heavily indebted finance sector.
An increase in lending, 4.6 trillion yuan in the first quarter, the largest sum ever since the data was released, contributed to economic growth, but that influence might not last till the third quarter, said Song Yu, chief economist of Goldman Sachs Gao Hua Securities.
Reacting to the high level of outstanding debt, which may increase overall economic risk, the State Council, China's cabinet, released guidelines to lower corporate leverage by a variety of means, including debt-for-equity swaps, bankruptcies and mergers and acquisitions.
(from ChinaDaily.com.cn)
