Chinese economy slows to one-year low of 4.8% in Q3 amid property slump and US trade tensions

China's economic growth in the third quarter slowed to the weakest pace in a year, aligning with expectations. This slowdown is due to prolonged property slump and trade tensions that have impacted demand, which may likely push policymakers to roll out more stimulus to boost momentum, according to a report by Reuters.

The Chinese authorities have announced a modest stimulus package this year, supported by resilient exports and strong stock markets. However, renewed US-China trade tensions pose risks in addition to a challenge in rebalancing the economy to ensure greater consumption over time.

Even though there is room for more stimulus, analysts are divided over whether policymakers will provide it this year.

China's GDP

China's gross domestic product (GDP) rose 4.8% in July-September quarter, down from 5.2% in the second quarter, matching with analysts' expectations in a Reuters poll estimating a 4.8% growth.

The National Bureau of Statistics data showed that GDP grew 1.1% in the third quarter, compared with a forecast 0.8% increase and a revised 1.0% gain in the last quarter.

Concerns of the Chinese economy

The increased trade tensions with the US have exposed the vulnerabilities of China's economy, which is heavily dependent on manufacturing and overseas demand. This has led to rising expectations that Chinese leaders might undertake difficult reforms to shift growth towards domestic consumption, the report said.

Although China's export growth picked up in September, recent data indicate that the world's second-largest economy has slowed down, and deflationary pressures continue despite attempts to reduce overcapacity and intense competition among companies.

Even though headline figures remain strong, exporters are already experiencing the effects of increased US tariffs introduced earlier this year, prompting many to seek new markets.

US President Donald Trump has warned that tariffs on Chinese goods will increase by an additional 100% from November 1 onwards. However, US officials have hinted that both Washington and Beijing are prepared to resolve their tariff issues.

Chinese leaders will hold a closed-door meeting from Monday to Thursday to discuss, among other topics, the nation's 15th five-year development plan. This plan is anticipated to focus on boosting high-tech manufacturing, especially as competition with the US grows.

Investors are also waiting for hints on economic policy for next year from a Politburo meeting and the Central Economic Work Conference, both expected in December.

Meanwhile, the September activity data, which was released on Monday, revealed that the industrial output rose 6.5% year-on-year in September, up from a 5.2% increase in August and beating the forecast of 5.0%. Retail sales growth slowed to 3.0% in September from 3.4% in August, alogning with the forecast increase of 3.0%.