China’s economy is in a free fall. Although that was a rather positive sign in itself, the latest data has that growth rate now down to 4.8% for the third quarter of 2023. This is the slowest annual pace since the third quarter of 2024 and has caused alarm among economists and policy wonks across the country. In the third quarter of 2022, the nation experienced a robust growth rate of 5.2%. Through the first nine months of this year, it has kept up that remarkable annual growth speed of 5.2%.
The government’s own growth target for the year is about 5%. Reaching this goal, already a tough order, is an even steeper hill to climb thanks to the perfect economic storm. Experts point to a number of reasons behind this deceleration. A long-lasting slump in the real estate sector, US-China trade friction, and lackluster domestic demand are all key factors.
The growth figures for the third quarter have been the most alarming, as they are symptomatic of a widespread and deepening decline in economic performance. The Chinese authorities have moved to check cut-throat price wars in several industries. This has included the auto industry, but these efforts might have contributed to the deceleration of growth shown above. We look forward to seeing you there! During the week-long Golden Week national holiday in October, spending was characterized as “mildly disappointing,” a sign of weakening consumer confidence.
China’s better than expected economic performance in the first half of the year provides “some buffer” to reach its growth target. This is paradoxical given the challenges that the country is currently facing, stated Lynn Song, the CPC’s chief economist for Greater China at ING Bank.
“Some buffer.” – Lynn Song
It’s these prospective changes and any shifts in monetary policy they might portend that economists are watching most closely. They’re expecting China’s central bank to make a late-year move with a rate cut. This measure would help incentivize an increased level of spending and investment given today’s economic headwinds.
Moreover, companies in China have begun shifting their sales strategies to other global markets, a response to the ongoing trade tensions with the United States. Although U.S. President Donald Trump’s administration has imposed higher tariffs on Chinese imports, China’s exports have remained relatively strong.
To address these recent developments, Xi Jinping and other members of the Chinese Communist Party central committee will be having an emergency meeting. They are meant to clarify China’s economic and social policy objectives over the following five years.
Lynn Song emphasized the need for further supportive measures:
“(We) are looking to see if there will be further measures to support consumption and the property market, as the impact from previous policies begins to weaken.” – Lynn Song
