- Chinese Economy Sustains Growth in 3Q; Expands 6.8%
The world’s second-largest economy China sustained growth in the third quarter following improved factory output and consumer spending.
Gross domestic product expanded at 6.8 percent year-on-year in the third quarter, same as predicted and 0.1 percent lower than the first half of the year growth of 6.9 percent.
Retail sales surged 10.3 percent from a year ago in September, indicating robust consumer spending and growing economy. Also, factory output grew 6.6 percent last month while fixed-asset investment jumped 7.5 percent in the first nine months of 2017.
The economy entered the final quarter of the year with a remarkable growth, even with capacity reduction program and credit control policy instituted to curb rising household debt. However, the reduction has helped headline inflation number as Producer Price Index rose 6.9 percent year-on-year in September.
“Consumption is the stabilizing factor of the economy, and industrial output actually quickened in September, which was also reflected in the PMI reading,” said Grace Ng, an economist at JPMorgan Chase & Co. in Hong Kong. “Growth in the fourth quarter could moderate a bit mainly due to possible slower investment, but in general this year is quite stable. And the emphasis on quality, efficiency and sustainability in President Xi Jinping’s party congress speech also would benefit China’s development in the long run.”
Demand remained strong going into the final quarter of the year. This should further support productivity and stimulate the economy towards PBoC’s target. Also, while consumer prices plunged to 1.6 percent in September from 1.8 percent in August, prices are expected to pick up in the first half of 2018 as China looks to avoid extreme air pollution in its Northern cities.
“External demand this year is quite solid, which supports growth, and consumption also is robust,” said Wen Bin, a researcher at China Minsheng Banking Corp. in Beijing. “Investment slipped a bit, due to the campaigns to clean up overcapacity and environment, but in general China’s economy is showing good momentum.”
Solid consumption contributed 64.5 percent of the total GDP in the first 9 months of the year.