China Growth Weakest Since Financial Crisis

Written By Unknown on Kamis, 23 Oktober 2014 | 00.11

The slump in China's property market contributed to a further slowdown in the country's economic output in the third quarter of the year.

Official figures showed GDP growth at its weakest level since early 2009 during the period, rising by 7.3% on an annual basis.

The performance, while better than some analysts had expected, followed growth of 7.5% in the previous quarter, and the slowdown reinforced expectations that Beijing would announce more targeted stimulus measures.

Communist leaders are trying to steer China toward growth based on domestic consumption instead of over reliance on trade and investment but the deterioration in output growth raises fears of politically dangerous job losses.

Premier Li Keqiang has stated repeatedly that the country can tolerate slightly lower growth.

The Chinese economy - while still growing an an enviable rate - has a number of problems with the collapse in property values currently at the top of the list.

The government took action to help arrest house price declines and falling construction last month by cutting mortgage rates for some home buyers for the first time, though it was too early for the impact of those measures to be felt in the third quarter.

Developers have huge inventories of unsold homes, and increasingly risk-averse banks are wary about financing new mortgages which would only increase their exposure to the weakening sector.

Separate property data for September also released on Tuesday showed that the slowdown had deepened in the quarter, with real estate investment falling compared with a year ago, while revenue from property sales dropped 8.9%.

High infrastructure spending has helped maintain robust employment but that mini-stimulus is now fizzling out - hence the focus now on Beijing's policymakers.

A majority of economists do not see aggressive action, in the form of interest rate cuts, in the short term.

Leaders have previously ruled out massive stimulus as China is still struggling with a mountain of local government debt built up in 2009 when Y4trn (£401bn) was spent to cushion the impact of the global financial crisis.


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