China third quarter GDP growth likely to cool as property, debt curbs bite
China is expected on Thursday to post a modest slowdown in third quarter economic growth from the previous quarter as the government`s efforts to rein in the property market and debt risks weigh on activity in the world`s second-largest economy.
Analysts polled by Reuters expect gross domestic product (GDP) to have grown 6.8 percent in the July-September period, cooling from the previous quarter`s 6.9 percent expansion.
The slowdown projected by analysts, however, is at odds with central bank governor Zhou Xiaochuan`s comment earlier this week that the economy could grow 7 percent in the second half of the year, versus 6.9 percent in the first six months, raising the prospect of an upside surprise in the official numbers.
Chinese policymakers are treading a fine line by taking steps to defuse property bubbles and contain risks from an explosive build-up of debt without stunting economic growth.
Although economists expect a cooling in third-quarter expansion, the projected growth is still within Beijing`s comfort zone, as President Xi Jinping is set to strengthen his grip on power at a Communist Party Congress that opened on Wednesday.
"While the good performance of the first two quarters in 2017 should carry further to the third quarter given strong fiscal and monetary tailwinds, there have already been some signs of deceleration, especially for exports, investment and the slowdown in real estate prices," Alicia Garcia-Herrero, Asia economist at Natixis, said in a note.
"Behind the strong economic numbers are worrisome problems like still mounting debt, a low return on assets and the continued pressure of capital outflows."
China`s property investment and construction are seen slowing as more cities try to curb surging housing prices, while a government campaign against riskier lending pushes up borrowing costs and a crackdown on pollution hurt some factories.
REFORM PLEDGE
A better-than-expected GDP reading would likely lift stocks and global commodity prices and boost bullish sentiment on the yuan, which has gained about5 percent against the dollar so far this year.
Economists in the poll estimated GDP grew 1.7 percent quarter-on-quarter, unchanged from the second-quarter, though only 18 analysts gave sequential forecasts.
President Xi said at the opening of the party congress that China will deepen economic and financial reforms and further open its markets to foreign investors, amid widespread disappointment among foreign executives and analysts about the pace of reforms and market opening.
Few specific policy changes are expected from the Party Congress and analysts are looking to the annual Central Economic Work Conference, which is usually held in December, for signals on the 2018 growth target and policy initiatives. The central bank in late September cut the amount of cash that some banks must hold as reserves (RRR) for the first time since February 2016. The move, effective in January, offers an earnings boost to banks if they lend more to struggling smaller firms and the private sector.
The economy grew 6.9 percent in the second quarter - in line with the first quarter and defying expectations for a slowdown due to firmer exports and a resilient property sector as demand for homes spread to smaller cities. The economy is on track to hit the government`s full-year growth target of around 6.5 percent.
China`s statistics bureau will release third-quarter GDP on Thursday, along with September industrial output, retail sales and fixed asset investment.
Economic activity showed visible signs of slowing in July and August, but some data for September pointed to a slight improvement, with imports and bank lending growing more than expected, while exports picked up.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
09:00 AM IST