Chinese growth stabilised in the third quarter, data showed on Wednesday, as ample credit and hot property markets propped up the world’s second-largest economy.
But while the forecast-beating reading was in line with state targets, it comes as experts warn that authorities have relied too much on easy credit, which has in turn increased financial risks.
“The general performance was better than expected,” the National Bureau of Statistics (NBS) said in a statement. “The national economy grew steadily with progress made and quality improved.”
The government has targeted 6.5-7.0 per cent growth for the year, following 6.7 per cent last year which was the slowest rate in a quarter of a century.
“It was so in-line with expectations that I could have written this yesterday, to be honest,” Michael Every with Rabobank in Hong Kong told AFP. “It’s amazing what a housing bubble and crazy debt increases can achieve.”
Also Wednesday data showed a pick-up in retail spending, which has become an increasingly important component as Beijing looks to recalibrate the country’s growth driver from investment and exports to consumer demand.
However, Beijing’s attempts to retool the economy have proven painful, with authorities resorting to stimulus measures as they try to avoid a hard landing.
The NBS acknowledged that the economy was in “a critical period of transformation and upgrading, with old drivers of growth to be replaced by new ones”.
With “a number of unstable and uncertain domestic and external factors”, it added, “the foundation of continued economic growth is not solid enough.”
The booming property market and loose lending supported the latest figures, Claire Huang of Societe Generale told AFP, adding that new house-buying regulations and necessary credit tightening meant “the downturn will become even more obvious” in the fourth quarter and next year.
Data released on Tuesday showed new loans by Chinese banks in September surged nearly 30 per cent over the previous month, deepening concern about risky credit expansion.
Earlier this month the International Monetary Fund warned that China’s dependence on debt was growing at a “dangerous pace” and risked a “disruptive adjustment” in the financial system.
That came after the Bank for International Settlements — dubbed the central bank of central banks — warned China’s banking sector could be facing an imminent debt crisis, fuelling fresh fears of a blowout that could hit the global financial system.
China’s industrial output growth eased to 6.1 per cent on-year in September, down from 6.3 per cent in August, as sluggish global demand weighed on the world’s biggest trader in goods.
But retail sales, a key measure of consumer spending, rose 10.7 pe rcent on-year last month, representing a slight acceleration from August.
Fixed-asset investment, a gauge of infrastructure spending, rose 8.2 pe rcent in the first nine months of the year.
The figures showed that crude steel production rose 3.9 per cent on-year in September, despite repeated pledges to cut overcapacity and excess production in the industry, which is dominated by bloated state-owned enterprises.