In the third quarter of 2014, China's gross domestic product expanded 7.3 percent year-on-year, slumping to a five-year low. The slowdown was driven by lower property investment, dwindling credit growth and weakening industrial production.
In September, fixed asset investment increased 16.3 percent year-on-year, slowing from a 16.5 percent rise in August. Industrial production advanced 8.0 percent, from 6.9 percent in the previous month. Retail sales rose 11.6 percent compared with 11.9 percent in August. Also, in September inflation rate slowed for the second straight month to an annual 1.6 percent, down from 2.0 percent in the previous month and reaching the lowest level in nearly five years.
On the other hand, exports grew a better-than-expected 15.3 percent year-on-year in September, up from a 9.4 percent in August. Yet, there are suspicions again that the numbers are inflated due to over invoicing as Chinese bring money into the mainland from Hong Kong to take advantage of an appreciating renminbi.
Quarter-on-quarter, the GDP expanded 1.9 percent, compared with a 2 percent from April to June. Year-to-date the economy grew 7.4 percent.
At the beginning of October, The World Bank has cut China's growth forecast for the next three years and projected the GDP would slow down in 2014 to 7.4 percent from a previous estimate of 7.6 percent. Yet, Chinese officials have pledged the government would tolerate growth slightly lower than the targeted 7.5 percent for 2014.
Premier Li Keqiang recently said China will launch major investment projects in information networks, environmental protection, infrastructure and water conservancy. He also pledged that "Fiscal and monetary policies would be kept flexible and appropriate targeted adjustments made when needed to support the real economy". So far, in September, China's central bank relaxed lending rules for home buyers and allowed banks to offer a maximum 30 percent discount to first time home buyers. The bank also injected CNY 500 billion (USD 81 billion) into five largest banks via a three-month standing lending facility operation, a move aiming to support credit and growth.
10/21/2014 7:57:59 AM