China’s gross domestic product (GDP) growth rate in the third quarter of this year exceeded market forecasts by 4.9%. Critics point out that China’s real estate market is still a risk factor, along with expectations that the economic recovery is becoming visible.
China’s National Bureau of Statistics announced on the 18th that China’s third-quarter GDP increased 4.9% compared to the same period last year. Although it slowed compared to the 6.3% economic growth rate in the second quarter, it rose slightly from the first quarter (4.5%). Reuters’ own market forecast (4.4%) also exceeded. In addition, China’s GDP rose 5.2% from the same period last year to 91.3027 trillion yuan in the first three quarters.
In particular, analysts say that the recovery of industrial production and retail sales continued last month, showing the effect of the government’s economic stimulus measures. China’s retail sales rose 5.5% in September from the same month last year, exceeding market expectations (4.9%). It was the second consecutive month of gains following a 4.6 percent increase in retail sales in August. The growth rate of industrial production in September was 4.5%, the same as the previous month, exceeding market expectations (4.3-4.4%).
These indicators show China is likely to meet its GDP target of about 5% this year, Reuters noted. Statistics officials believe China will meet its growth target for this year if its GDP hits 4.4% or higher in the fourth quarter.
But the slump in the real estate sector, which accounts for about a quarter of China’s economic output, remains a challenge. Total real estate development investment from January to September this year fell 9.1% from the same period last year. China’s private sector investment fell 0.6% from January to September.
According to a message from Beijing sources who are well versed in Chinese real estate industry information on the 18th, Country Garden reportedly failed to repay interest on dollar debt whose repayment grace period ended on the same day. It is worth only 15.4 million dollars. As such, it can be said that Country Garden’s financial situation is poor. It would be only a matter of time before officially declaring a default.