China announced the slowest economic growth rate in the last 18 months, at a time when it is trying hard to stabilize an economy suffering from weak consumer spending and continuing challenges in the real estate sector, according to a report by the British newspaper The Guardian.
China’s National Bureau of Statistics (NBS) said the economy recorded a growth of 4.6% year-on-year in the third quarter of 2024, compared to 4.7% in the previous quarter. This decline – according to the newspaper – is the slowest since the beginning of 2023, when China was emerging from the strict lockdown restrictions it imposed during the Corona pandemic.
However, this percentage was slightly better than the expectations of analysts polled by Agence France-Presse, who expected growth of 4.5%.
This slowdown comes in light of the Chinese government’s efforts to achieve the official annual growth target of 5%. But the optimism sparked by the market in recent weeks due to expectations of a “big stimulus” has begun to fade, as the authorities declined to provide a specific number or details of the financial pledges.
The Chinese authorities have sharply strengthened stimulus measures since late September, but markets are awaiting more details about the size of the stimulus package and a clearer roadmap to restore the economy’s long-term sustainability.
Chinese officials expressed, in a press conference after the data was published, their confidence in the economy’s ability to achieve the government’s growth target for the full year, through more supportive policies and another reduction in the reserves that banks can hold.
Consumer spending challenges
In addition, weak domestic spending continues to negatively impact economic growth, increasing fears of a slide toward deflation. In this context, the Consumer Price Index for last September – a key measure of inflation – did not meet desired expectations, reflecting continued weak demand.
Despite a series of measures recently revealed by the Chinese authorities, such as interest rate cuts and easing restrictions on home purchases, investors are demanding more clarity about financial plans and how the Chinese economy will shift to a model based on sustainable consumption.
“We are waiting for more clarity on the fiscal stimulus, and we may have to wait until November to find out the details,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
In the same context, the Chinese government said that it is committed to achieving the annual growth goal, but experts believe that more direct financial stimulus is needed to revive economic activity and restore confidence.
