China Growth Holds Steady at 6.7% in Third Quarter
Economists expect stronger pace of expansion to last through end of year
REUTERS
By MARK MAGNIER
Wall Street Journal
Updated Oct. 18, 2016 10:46 p.m. ET
BEIJING—China’s drifting economy steadied in the third quarter, clocking in 6.7% growth fueled by easy credit, a hot property market and other stimulus measures that economists say come at the expense of needed restructuring.
The third-quarter pace, reported by the government Wednesday, matches the rate posted in the second quarter and meets market and economists’ expectations. Chinese leaders have sounded upbeat in recent days about the economy, which has been on a downglide in recent years but whose performance is on track to achieve the government’s growth target of 6.5% or higher.
Economists expect the strong pace of expansion to last through the end of the year, supported by a flood of loans and government spending that has fed infrastructure spending and a rebound in the property market.
Those measures, while helpful for short-term growth, are masking deeper-set problems of industrial overcapacity and high levels of corporate debt, economists said. “They’ve pumped up growth with monetary and fiscal policy,” said Alicia Garcia-Herrero, economist with investment bank Natixis, part of France’s Groupe BPCE. “That’s about all they have.”
Other performance indicators were more mixed. Industrial production increased by 6.1% year-over-year in September compared with 6.3% in August, according to the National Bureau of Statistics. Investment in factories, buildings and other fixed assets in nonrural areas climbed 8.2% year-over-year in the January-September period, edging up from the 8.1% pace for the first eight months. Retail sales, helped by cuts in vehicle taxes, edged up to 10.7% in September from a year earlier, compared with 10.6% in August.
The strong real-estate market is a particular concern for economists and the government. Property prices in some larger cities have increased in recent months by more than 40% year-over-year. Mortgages accounted for 60% of new loans last quarter, up from 47% in the second quarter and 23% in the first. Authorities in more than 20 cities have introduced restrictions to dampen speculation without choking off growth.
Chinese leaders have said slower growth is welcome after the boom years, providing time to unwind imbalances and reposition the economy toward services and consumers. But, worried about social tensions and the effect low growth might take on the financial system, the government has sought to pump up the economy.
—Liyan Qi and Pei Li contributed to this article.
Write to Mark Magnier at mark.magnier@wsj.com
REUTERS
By MARK MAGNIER
Wall Street Journal
Updated Oct. 18, 2016 10:46 p.m. ET
BEIJING—China’s drifting economy steadied in the third quarter, clocking in 6.7% growth fueled by easy credit, a hot property market and other stimulus measures that economists say come at the expense of needed restructuring.
The third-quarter pace, reported by the government Wednesday, matches the rate posted in the second quarter and meets market and economists’ expectations. Chinese leaders have sounded upbeat in recent days about the economy, which has been on a downglide in recent years but whose performance is on track to achieve the government’s growth target of 6.5% or higher.
Economists expect the strong pace of expansion to last through the end of the year, supported by a flood of loans and government spending that has fed infrastructure spending and a rebound in the property market.
Those measures, while helpful for short-term growth, are masking deeper-set problems of industrial overcapacity and high levels of corporate debt, economists said. “They’ve pumped up growth with monetary and fiscal policy,” said Alicia Garcia-Herrero, economist with investment bank Natixis, part of France’s Groupe BPCE. “That’s about all they have.”
Other performance indicators were more mixed. Industrial production increased by 6.1% year-over-year in September compared with 6.3% in August, according to the National Bureau of Statistics. Investment in factories, buildings and other fixed assets in nonrural areas climbed 8.2% year-over-year in the January-September period, edging up from the 8.1% pace for the first eight months. Retail sales, helped by cuts in vehicle taxes, edged up to 10.7% in September from a year earlier, compared with 10.6% in August.
The strong real-estate market is a particular concern for economists and the government. Property prices in some larger cities have increased in recent months by more than 40% year-over-year. Mortgages accounted for 60% of new loans last quarter, up from 47% in the second quarter and 23% in the first. Authorities in more than 20 cities have introduced restrictions to dampen speculation without choking off growth.
Chinese leaders have said slower growth is welcome after the boom years, providing time to unwind imbalances and reposition the economy toward services and consumers. But, worried about social tensions and the effect low growth might take on the financial system, the government has sought to pump up the economy.
—Liyan Qi and Pei Li contributed to this article.
Write to Mark Magnier at mark.magnier@wsj.com
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