China posts slowest growth in over a year as property woes drag

China posts slowest growth in over a year as property woes drag

China posted its slowest quarterly growth since early 2023 as it is beset by a crisis in the property sector

China posted its slowest growth in a year and a half on Friday as authorities come under pressure to follow up a recent slew of stimulus with more action to reignite the world's number two economy.

Authorities have since last month unveiled a raft of measures to kickstart sluggish consumption and address a prolonged and debilitating debt crisis in the country's colossal property sector.

After a blistering market rally fuelled by hopes for a long-awaited "bazooka stimulus", optimism has tapered as authorities refrained from providing a specific figure for the bailout or detailing any of the pledges.

On Friday, Beijing's National Bureau of Statistics (NBS) said the economy expanded 4.6 percent year on year in the third quarter, down from 4.7 in the previous three months and the slowest since early 2023, when China was emerging from its strict zero-Covid policy.

The NBS acknowledged a "complicated and severe external environment... as well as new problems of domestic economic development".

Still, figures showing a forecast-beating rise in September retail sales -- a gauge of consumer activity -- provided a ray of light after a string of below-par readings on a range of indicators including inflation, investment and trade.

And ahead of the data, state media said the country's top banks had cut interest rates on yuan deposits for the second time this year as part of a move to boost lending.

Beijing has said it has "full confidence" in achieving its annual growth goal of five percent, but economists say more direct fiscal stimulus is needed to revive activity and restore business confidence.

Recent weeks have seen authorities unveil a raft of measures to funnel cash into the economy including a string of rate cuts and loosened restrictions on home-buying.

China's central bank on Friday launched one such measure -- a swap facility for funds and insurers with an "initial application quota exceeding 200 billion yuan" ($28.1 billion),  state media said.

The mechanism implemented by the People's Bank of China (PBoC) will provide greater liquidity for capital markets, which policymakers hope will offer support for the wider economy.

And in a possible sign of more relief to come, PBoC chief Pan Gongsheng said Friday that officials were considering a further cut to the amount commercial lenders must hold in reserve before the end of the year.

- 'Still unclear' -

The recent raft of announcements -- which included a hint at raising the government debt ceiling and measures to support indebted local governments -- are a move "in the right direction", said Benson Wu, China and Korea economist at Bank of America Global Research.

"That said, the size and the form of fiscal supports are still unclear," Wu told AFP.

"More still needs to be clarified before we can have a thorough assessment on the effectiveness of the policies."

One major headache facing the economy has been a prolonged crisis in the property sector, which has long been a key driver of growth but is now mired in a sea of debt.

Prices of new homes in September only increased on an annual basis in two out of 70 large and medium-sized cities surveyed by statistics authorities.

Meanwhile, China's official urban unemployment rate ticked down to 5.1 percent last month, NBS data showed, from 5.3 percent in August.

On Thursday, officials said they would boost credit available for unfinished housing projects to more than $500 billion, a move intended to boost activity in the property sector.

But as with a stream of much-touted briefings in the past week, the news conference failed to impress with its lack of big-ticket financial pledges.

The latest GDP figures mean Beijing's goal of a five percent expansion in 2024 will be "difficult to achieve if this trend continues to year end", said Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management.

"We are waiting on more clarity on the fiscal stimulus," said Zhang in a note.

"We may have to wait till November to find out details, as the outcome of the US election is probably one factor that influences the policy thinking in Beijing," he added.

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