BEIJING – China’s economy grew slightly more than expected in the third quarter, but yesterday’s figures still fell short of the government’s full-year target, as the global energy shock and weak domestic demand offset surging exports.
The world’s second-largest economy has charted a diverging path in recent years, with an AI-fuelled export boom masking the impact of a persistent real estate crisis and gloomy consumer sentiment.
Gross domestic product expanded 4.5% in June-September, according to the National Bureau of Statistics.
The reading improved on the previous quarter’s 4.3% expansion and was just ahead of the 4.4% predicted in an AFP poll of economists.
Beijing hopes for annual growth of 4.5-5.0% this year, its lowest goal in decades.
“Exports seem to be the only outperformer,” Guo Shan of Hutong Research told AFP ahead of the data release.
She said China risked missing its official target for the year, spurring a recent roll-out of mortgage subsidies for certain home purchases and support for infrastructure investment.
Beijing “will need to work faster to deploy the funds so as to hit the growth target”, she added.
While consumer activity has been a drag this year, separate data yesterday’s showed retail rose 1.1% last month, the fastest pace since March.
The Chinese economy is also under pressure from high energy costs driven by the Iran war, which has stymied shipping from the oil-rich Gulf.
China is the world’s largest crude importer.
Higher energy prices and “protracted uncertainty and structural headwinds” led the International Monetary Fund to slightly downgrade its projection for China’s annual growth this year to 4.5% last week.
IMF officials gathering in Bangkok for its meetings with the World Bank described Beijing’s recent support measures as “limited”.
Rebalancing’ needed
Economists say China’s economy must shift towards a more sustainable growth model powered more by domestic consumption than traditional drivers like construction, property development and exports.
That long-awaited “rebalancing” of the Chinese economy has yet to materialise, Krishna Srinivasan, director of the IMF’s Asia and Pacific department, said.
Exports, for decades the engine of China’s economy, remain a bright spot.
Figures released last week showed a surge in overseas shipments put the country on course for another record trade surplus that would top last year’s US$1.2 trillion.
That export boom has been driven largely by insatiable global demand for AI-related products, including computers, semiconductors and data centre equipment.
But elsewhere, China’s soaring surpluses are stoking tensions with key trading partners, including the European Union and the United States.
Talks this month between EU trade chief Maros Sefcovic and Chinese counterpart Wang Wentao ended with an agreement to limit exports of Chinese hybrid vehicles to Europe.
Many critics contend that Beijing’s extensive subsidies to domestic industries in recent years have given them an unfair advantage in foreign markets.
Domestic demand woes have also exacerbated the problem, as manufacturers increasingly look overseas for new growth.
–Nampa/AFP
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