Explainer | Is China still within striking distance of its full-year growth target?

China’s gross domestic product growth in the third quarter was largely in line with expectations, while retail sales hit a four-month high

Reading Time:4 minutes

Why you can trust SCMP

02:15

China sees slowest economic growth in over a year with 4.6% GDP in third quarter

Andrew Mullen

Published: 12:00am, 19 Oct 2024

1. Growth target ‘difficult to achieve’

China’s economy grew by 4.6 per cent in the third quarter compared to a year earlier, with the growth rate the lowest since the middle of last year.

The gross domestic product growth figure was largely in line with the 4.58 per cent projected by economists surveyed by Chinese financial data provider Wind, and below the 4.7 per cent growth recorded in the second quarter.

“While it is a marginal decline from the second quarter, it makes the official growth target of 5 per cent difficult to achieve if this trend continues to the end of the year,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.

Tan Junyu, a regional economist for North Asia with credit insurance company Coface, said the GDP number was consistent with a “soft patch” of domestic economic indicators over the summer.

“More specifically, the demand-side weakness has trickled down to production, which was previously supported by a recovery in exports. The lingering deflationary pressure, evidenced by the negative GDP deflator for a sixth consecutive quarter, may also prompt more businesses to slash their production,” he said.

Zichun Huang, China economist at Capital Economics, said the slowdown largely reflected a stronger base for comparison, and in seasonally adjusted quarter on quarter terms, growth recovered from a downwardly revised 0.5 per cent to 0.9 per cent.

2. Trade-in programme lifts retail sales to 4-month high

China’s retail sales rose in September by 3.2 per cent, year on year, compared with the 2.1 per cent growth seen in August, hitting a four-month high.