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WRAPUP 2-China economy slows for 7th quarter, pick-up seen in Q4
2012年10月18日 / 凌晨3点17分 / 5 年前

WRAPUP 2-China economy slows for 7th quarter, pick-up seen in Q4

* Q3 GDP grew 7.4 pct y/y, versus f‘cast +7.4 pct, Q2 +7.6 pct

* First below-target quarter since Q1 2009

* Seventh successive quarter of slowing GDP growth

* Sept industrial output +9.2 pct y/y, vs f‘cast +9.0 pct, Aug +8.9 pct

* Sept retail sales +14.2 pct y/y, vs f‘cast +13.2 pct, Aug +13.2 pct

By Kevin Yao and Aileen Wang

BEIJING, Oct 18 (Reuters) - China’s economy slowed for a seventh straight quarter in July-September, missing the government’s target for the first time since the depths of the global financial crisis, but other data released on Thursday pointed to a mild year-end rebound.

GDP grew 7.4 percent in the third quarter from a year earlier, the National Bureau of Statistics (NBS) said, in line with forecasts from economists polled by Reuters.

Industrial production, retail sales and investment data were all slightly ahead of forecasts, however, and quarter-on-quarter GDP growth was strong, suggesting the worst may be over and the world’s No.2 economy will pick up in the final quarter - as a once-a-decade leadership transition gets under way in Beijing.

It all added up to annual economic growth of 7.7 percent in the first nine months of the year, setting China up to beat or exceed the government’s official 2012 target of 7.5 percent.

“We have 7.7 percent growth in September, which laid a solid foundation for achieving the full-year growth target. So we are confident that we can achieve 7.5 percent full-year growth or above,” NBS spokesman Sheng Laiyun told a news conference.

Riskier assets reacted positively, with Asian shares outside Japan rising to a 7-month high, while the Australian dollar, sensitive to Chinese demand for industrial commodities, touched its highest in two weeks.

While GDP growth at 7.4 percent would be cause for joy in recession-stalked developed economies, it represents a sharp slowdown for China, where GDP grew 9.2 percent in 2011 and has averaged an annual rate around 10 percent for three decades.

Fixed-asset investment rose 20.5 percent in January-September from a year earlier, ahead of the 20.2 percent consensus forecast, although still down from around 25 percent seen for most of last year.

Consumption also quickened, with retail sales in September expanding by 14.2 percent year-on-year, ahead of the 13.2 percent forecast, which would have been unchanged from August.

Growth in factory output came in at 9.2 percent, slightly ahead of both the 9.0 percent forecast and August’s 8.9 percent.

HEALTH WARNING

The biggest upside surprise in the data flurry also carried the biggest health warning - a quarter-on-quarter surge of 2.2 percent in Q3, implying an annualised growth rate of 8.8 percent. It was far ahead of Q2’s 1.8 percent quarterly growth, a level that investors had expected to hold steady.

“The quarter-on-quarter data has in the past on many occasions been hard to reconcile and hard to replicate,” Zhang Zhiwei, chief China economist at Nomura in Hong Kong said.

“To me it is a little bit puzzling that Q3 quarter-on-quarter improved so much. I wouldn’t read too much into it.”

Real estate investment, which affects 40 other business sectors from cement and steel to furniture, was also an area of uncertainty for economists.

It rose 15.4 percent in the first nine months of 2012 from a year earlier, slowing from an annual increase of 15.6 percent in January-August.

Meanwhile, land sales growth slowed to 4.9 percent in September from a year earlier, down sharply from August’s 20.4 percent, according to Reuters’ calculations based on NBS data, and newly started property construction fell 8.6 percent in the first nine months of the year, accelerating the January-August fall of 6.8 percent.

“There is still a bit of uncertainty around how much housing can hold up. That’s a critical sector, representing 27 percent of (total) investment and that’s probably where the uncertainty is at the moment,” Zhang said, adding that nevertheless signs were clearly for a visible rebound in GDP growth in Q4.

GROWTH TARGET

The Q3 GDP number represented the first miss of the official target since the first quarter of 2009’s 6.5 percent.

The government targets growth of 7.5 percent for the full year - reduced in 2012 from the previous 8 percent target - and the consensus forecast of economists polled by Reuters is that it will deliver on it, with an expansion of 7.7 percent.

Indeed, Premier Wen Jiabao was quoted by local media as saying on Wednesday that the economic situation in the third quarter was relatively good, and the government was confident of achieving its goal.

But the steady slowdown has confounded forecasters repeatedly this year, with the initial consensus call for growth to bottom in the first quarter being persistently beaten back to its present position of a trough in the third quarter followed by a mild uptick in the fourth quarter.

Some analysts cite electricity usage growth running at roughly half the average rate of the last five years as a manifest sign of economic malaise.

The NBS said energy consumption per unit of GDP had dropped by 3.4 percent from a year ago. That could stem from a more efficient use of energy, or be a sign that China’s much-heralded rebalancing away from dirty, resource-intensive heavy industry towards services and domestic consumption is gaining traction.

Economists meanwhile say there is clear evidence that the financial system’s liquidity taps have been opened wide and that fine-tuning policies - Beijing’s mantra for a year now - are working.

The fine tuning includes two interest rate cuts, three cuts to the proportion of deposits banks must keep as reserves (RRR) - freeing an estimated 1.2 trillion yuan ($190 billion) for lending - and approvals in the last month for infrastructure projects worth about $157 billion, although Beijing has not said explicitly where the money to fund them is coming from.

And investors should expect still to see further moves to underpin the fledgling recovery that the new leadership of the ruling Communist Party - set to be unveiled at a Congress next month - will want to cement.

Ting Lu, China economist at Bank of America/Merrill Lynch thinks 100 basis points of RRR cuts by year-end could come alongside more aggressive acceleration of new infrastructure project approvals and faster construction of existing projects.

“With the political dust almost settled, top policymakers have been shifting their focus on stabilizing economic growth and financial markets,” Lu wrote in a note to clients.

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