China’s gross domestic product rose 3.9 per cent year on year in the third quarter, far below its full-year target and laying bare the scale of the economic challenges facing the country.
The release of the data on Monday, delayed from last Tuesday, comes after China’s president Xi Jinping extended his rule for an unprecedented third term and tightened his grip on political power at the Communist party’s 20th congress last week.
While the government provided no explanation for the delay in releasing the data, the move was widely seen as an attempt to avoid distracting from the congress, which occurs once every five years and overhauls the upper echelons of the Communist Party.
The year-on-year growth rate, which analysts polled by Bloomberg forecast at 3.3 per cent, falls short of China’s full-year target of 5.5 per cent — already its lowest in three decades.
China’s economy is grappling with a property crisis and strict zero-Covid controls and lockdowns, which have largely curtailed the spread of the virus but also crippled consumer activity.
The data release helped spur a broad sell-off in Chinese equities on Monday, with the Hang Seng China Enterprises index in Hong Kong falling as much as 5.1 per cent and the benchmark CSI 300 index of Shanghai- and Shenzhen-listed stocks down as much as 1.5 per cent.
At the congress, Xi made little reference to China’s economic weaknesses and praised the coronavirus control measures, which include near daily testing and quarantine rules that have effectively closed the country off from the rest of the world. In the build-up to the event, China’s top epidemiologist said there was no timeline for a relaxation.
Third-quarter growth outperformed the second quarter’s increase of just 0.2 per cent, when Shanghai, China’s biggest city and financial hub, was placed under a harsh two-month lockdown.
In September, retail sales rose by just 2.5 per cent, missing a Reuters forecast of 3.3 per cent.
Industrial production, which powered Chinese growth in the first two years of the pandemic, rose 6.3 per cent last month. That was better than analysts’ expectations of 4.5 per cent, as the country’s manufacturing industry recovered from crippling supply chain disruptions and lockdowns.
Fixed-asset investment rose 5.9 per cent in the first nine months of the year. However, property sales, measured by floor area, were down 22 per cent and new constructions starts have slumped 38 per cent while property investment has dropped 8 per cent.
Policymakers this year have incrementally loosened key policy rates and taken measures to hasten the completion of unfinished housing construction projects, which were delayed after a series of defaults at highly indebted developers such as Evergrande.
But they have stopped short of implementing large stimulus measures and now face a weakening currency and a domestic stock market that has lost 34 per cent after accounting for the renminbi’s fall against the greenback.