China Economy Grows by 4.6% in Q3 2024 as Markets Clamor for More Stimulus

While growth slowed in the third quarter, other economic indicators suggested a modest recovery heading into Q4 2024. These included:

Retail sales increased by 3.2% year-on-year in September, up from 2.1% in August.
Industrial production rose by 5.4% year-on-year, following an increase of 4.5% in August.
The unemployment rate fell from 5.3% in August to 5.1% in September.

Focus Shifts to Fresh Fiscal Stimulus

In recent weeks, the People’s Bank of China (PBoC) and the Chinese government have rolled out various stimulus measures to bolster the Chinese economy. However, market reactions have been mixed. While the focus has been on increasing access to lending and the real estate sector, concerns about consumer appetite for borrowing and consumption linger.

Furthermore, weak overseas demand further dampens China’s growth prospects. In September, exports from China grew by 2.4% year-on-year, down sharply from an 8.7% rise in August. Imports increased by just 0.3%, highlighting weak domestic and overseas demand.

Expert Views on China’s Stimulus Measures and Economy

Natixis Asia Economist Alicia Garcia Herrero remarked on the recent stimulus package, stating,

“China’s first figure for stimulus is a rescue package for developers and not for consumption. As much as RMB 4 trillion (US$562bn financing is for housing projects on a ‘whitelist’. This whitelist was introduced last January and includes projects and developers eligible to receive further funding from local and state-owned banks to help them complete unfinished projects. Approved loans for whitelisted projects so far this year total Rmb2.2tn (US$313bn) and the economy has not even noticed it! In other words, don’t expect the economy to recover with this.”

Market Reaction to China’s Economic Data

On Friday, the Hang Seng Index had a mixed reaction to the economic indicators, rising to a post-stat high of 20,269 before falling to a low of 20,147.