Beijing: China’s economy remained stable in the third quarter, all but ensuring the government’s full-year growth target will be hit and paving the way for a policy switch toward reining in financial risks.
Gross domestic product (GDP) rose 6.7% in the third quarter from a year earlier, matching a projection by economists Bloomberg surveyed and smack in the middle of the government’s 2016 goal of 6.5-7% growth. Services industries paced the expansion in the first three quarters, with the sector growing 7.6%.
The stabilization gives room for policies aimed at containing swelling leverage and curbing excessive financial risks, with the International Monetary Fund (IMF) among those calling for such efforts. The government released guidelines last week for reducing debt, yet past pledges have often been ignored as rampant credit growth fuels surging prices in the nation’s biggest cities.
“It’s amazing what a housing bubble and crazy debt increases can achieve,” said Michael Every, head of financial markets research at Rabobank in Hong Kong. “This is not sustainable—but then the alternative is nothing anyone wants to think about.”
Industrial output increased 6.1% from a year earlier in September, compared with analysts’ median projection for a 6.4% rise. Chinese consumers—a major pillar behind the economy’s recent resilience—remained a prop, with retail sales rising 10.7% last month from a year earlier, matching economists’ median forecast.
Fixed-asset investment increased 8.2% in the first nine months, matching the forecast by analysts. Property developers seem to have taken heart from surging prices in major cities. Bloomberg