The National Bureau of Statistics of China announced on Monday (October 19) that in the third quarter, the GDP of the world's second largest economy increased by 4.5% year-on-year. This growth rate is slightly higher than previously expected.
In the second quarter, China's GDP growth was only 4.3%, the lowest level in three years. China's official growth target for this year is 4.5-5%. Last year, China’s official data showed that the preset target of 5% was achieved. The German Press Agency pointed out that one-third of the world's economic growth comes from China, but China's domestic situation faces difficult problems.
Mao Shengyong, a spokesman for China's National Bureau of Statistics, expressed optimism about achieving this year's growth target. For the weak growth in the second quarter, he gave the explanation for the oil price situation caused by the situation in the Middle East. He also expected improvement in the fourth quarter.
Mao Shengyong said: "We must also note that the international environment is complex and ever-changing, the problem of insufficient domestic demand is still prominent, and the foundation for economic stability and improvement needs to be consolidated."
Exports accelerate as concerns about trade tensions grow
China's economic development is still very unbalanced. Foreign trade remains prosperous: In the first nine months of this year, Chinese customs data showed that exports increased by 21.3% year-on-year. The growth rate in September even reached 36.3%. In particular, strong international demand for technology products such as semiconductors and artificial intelligence electronic products has driven trade growth.
ITC market analyst Andy Ji told Reuters: "High-tech products, chips, electric vehicles and their export value reflect the competitive strength of industrial modernization. This competitiveness is real and continues to grow."
Experts say foreign demand continues to support China's economy. In the first nine months of this year, China's trade surplus was approximately US$938 billion (approximately 834 billion euros). The huge trade surplus has caused tensions between China and its important trading partners. In particular, Europe is increasingly worried about the impact of cheap Chinese goods on local manufacturers.
Industry also remains an important pillar of the economy. The industrial added value of larger enterprises increased by 5.5% year-on-year in September, compared with 5.2% in August.
Real estate crisis continues
China's domestic situation is still very difficult. Although retail sales increased by 1.1% year-on-year in September, which was higher than expected, consumption is still very weak. Many consumers continue to hold tight to their wallets.
Investment showed even more pronounced weakness. Investment in new factories, new equipment, new buildings and infrastructure is lower than last year. From January to September, fixed asset investment fell 7.2% year-on-year. Investment in real estate development fell by 20.6%.
The real estate crisis has had a multi-level impact on the economy. Many homes have lost value, making homeowners reluctant to spend. Construction companies are taking on fewer new projects and outsourcing work. At the same time, many cities are financially strapped.
The government is trying to boost domestic demand. Starting from October, China will provide fiscal interest discounts for individuals’ first home loans. Chinese state media said this was the first time the country had provided interest discounts on personal mortgage loans.
The International Monetary Fund has recently slightly lowered its growth forecast for China. This year’s forecast is 4.5%, and in 2027 it will be only 4%. The International Monetary Fund warned of the consequences of weak domestic demand in China and called for greater support for consumption. The reason is that the problem of balancing the economy by pushing up exports will become more difficult in the long term.
