China’s 3Q Growth Most Impressive This Year, Outlook Grim

Chinese economy has grown at the fastest pace this year from July to September quarter fuelled by investment. However, the outlook does not seem to be very promising for the future, says a report from Reuters citing analysts.

China plans consumption led growth

China witnessed a 7.8 percent growth in its economy for the third quarter, which was according to the expectations of National Bureau of Statistics. For China, investment has been the core factor in the rise and has contributed to nearly half of the growth. However, policymakers wish consumption to play a greater part in the growth of the economy, which will bring in stability in the longer term.

China is looking forward to infuse consumption oriented growth in its economy though the country experience double digit growths backed by exports and investment for over three decades.

This indicates that the economy has seen a decline in its pace as against previous years and is further marred by the weak global demand. For the first nine months, China surged 7.7 percent, which was above the government target of 7.5 percent. The growth rate has outperformed the major economies but was the worst for China in past 23 years.

China according to the data is still no were near to become consumption dominated economy. Consumption contributed around 46 percent of growth, for the first nine months, which was less than 56 percent share of investment, while the share of exports dropped by 1.7 percent.

Exports down, investment up

According to the analysts, growth in the October to December quarter may drop. The world’s second-largest economy experienced a decline in last eight quarters out of 10. It is likely that exports will soften, and policymakers will bring in credit expansion after inflation reached seven months high.

Exports declined in September after the slowdown in demand from the emerging economies due to which economy suffered a setback, and the government thinks that it will continue.

There was an increasing investment in the property sector although the prices were high and certain measures are taken to bring down the prices. Real estate sector accounted to 15.8 percent of economic activity in the first nine months, which is an increase over 14.8 percent in the first half of the year.