China Focus: Observers divided over China GDP
BEIJING, Oct. 22 (Xinhua) -- Slower growth in the third quarter of China's economy divided observers over the country's outlook, with the majority still showing faith in the 2014's year-end outcome.
Gross domestic product (GDP) expanded 7.3 percent from a year ago in the July-September period, compared with 7.5 percent in the second quarter and 7.4 percent in the first quarter of this year, said the National Bureau of Statistics (NBS) on Tuesday.
GDP growth in the past quarter marked the slowest quarterly growth since the first quarter of 2009, but still remained within the "reasonable range" set by policymakers
Lian Ping, chief economist with the Bank of Communications, attributed the slowing growth to the shrinking property sector, but better economic structure paves way for strong recovery.
He has forecast 7.4 percent expansion in Q4 and the whole year's growth at around the same rate, based on expanding service sector and withering "false prosperity" tackled by anti-corruption and frugality campaigns.
Guan Qingyou, observer with Minsheng Securities, also offers a positive opinion, saying that despite the sluggish property sector, the economy will be slightly better in the fourth quarter as emerging industries and property sales will be improved under new policies.
Property sales went down by 8.9 percent year on year by the end of September, with that of residential property slumping 10.8 percent, the NBS data showed.
However, China's industrial production growth picked up to 8 percent year on year in September after a sharp slowdown to 6.9 percent in August, showing the strongest bearing on GDP growth.
"This bodes well for an economic recovery this quarter," Nomura said in its latest research note, keeping its forecast of China's GDP growth of 7.6 percent in the fourth quarter and 7.4 percent for 2014.
HSBC chief China economist Qu Hongbin said overall data for the three quarters and September suggested that domestic demand may be bottoming out, but exports and the property market still face uncertainties in the months ahead.
"We continue to expect more easing measures from monetary and fiscal fronts and a rate cut is still on the table toward year end or early next year," he said,"We keep our full year GDP growth forecast of 7.5 percent for 2014 unchanged."
Meanwhile, some observers are not so optimistic with forecasts, believing the downturn unlikely to reverse in short term.
Wang Tao, chief China economist with UBS, said better-than-expected data (market expectation as 7.2 percent) may dampen expectations of more aggressive policy easing.
The ongoing property downturn continued to hold back fixed investment and demand for heavy industry products such as steel and cement, and more recently automobiles, he said.
"We expect policy support to remain largely reactive and to include a cut in benchmark lending rates and general RRR cut," he said.
"Notwithstanding policies delivered so far and to come, we estimate growth slowing further to 7 percent in Q4 and 7.3 percent for 2014."
Senior China Economist at Citi Bank Ding Shuang expect traditional counter-cyclical measures to be deployed soon, starting with benchmark rate cut in Q4, in light of downside growth, inflation risks and continued capital outflow.
Meanwhile, Barclays expected growth to be supported by the government's "target easing" measures, a relaxation of macroprudential measures to support the property market, and investment projects to be rolled out to prevent a sharp downturn.
"We maintain our below-consensus 2015 GDP growth forecast of 6.9 percent," said Barclays chief China economist Chang Jian.
Chinese policymakers have hinted repeatedly in recent months that the government eyes a full-year GDP growth target of "around 7.5 percent" for 2014, vague wording that allows room for deepened reforms amid slower growth.
Premier Li Keqiang said a pace around the 7.5-percent target -- whether slightly higher or lower -- will be acceptable as long as employment is guaranteed, household income raised and quality and efficiency of the economy improved. Enditem