Number puts stimulus on edge
Reuters and Jennifer Li
Wednesday, October 22, 2014
China grew at its slowest pace since the global financial crisis in the September quarter and risks missing its official target for the first time in 15 years, adding to concerns the world's second-largest economy is becoming a drag on global growth.
China's gross domestic product grew 7.3 percent in the third quarter from a year earlier, the weakest rate since the first quarter of 2009. That was slightly above the 7.2 percent forecast by analysts but slower than 7.5 percent in the second quarter. The data added to expectations that growth will come in below the official 2014 target of 7.5 percent, which would be the first miss since 1999.
A weakening property market continued to weigh on broader activity in the third quarter, with revenue from property sales revenue and new construction tumbling in the first nine months of 2014, blunting the impact of earlier stimulus measures and a long-awaited pick-up in exports. Data showed factory output rose 8 percent in September from a year earlier, beating expectations and marking a recovery from August's six-year low of 6.9 percent. But fixed asset investment was weaker than expected, as were retail sales. That followed data last week which showed inflation cooled to a near five- year low, highlighting sluggish domestic demand and a lack of pricing power for firms. Government economists have said that if growth looked like dropping below 7 percent, authorities may take bolder and broader steps such as interest rate cuts. Standard Chartered (2888) expects China's GDP to be 7.4 percent this year, which will to slide to 7 percent next year. The government may lower the required reserve rate in the future, said head of investment strategy Will Leung Chun- fai.