China’s industrial production, retail sales and fixed-asset investment accelerated in September, reducing the urgency for added stimulus to support the economy after a seven-quarter slowdown.
Gross domestic product expanded 7.4 percent in the third quarter from a year earlier, the National Bureau of Statistics said in Beijing Thursday. That matched the median estimate in a Bloomberg News survey and compares with a previously reported 7.6 percent expansion in the second quarter. GDP rose 2.2 percent from the prior period, a four-quarter high.
Any rebound in growth may ease pressure on the Communist Party as officials begin a once-a-decade leadership transition next month. The government has paused for three months from easing monetary policy in the world’s second-biggest economy even as data showed trade, manufacturing and inflation cooled during the quarter.
“China’s economy is performing better than expected, and the bottoming will be clear in the fourth quarter,” said Zhu Haibin, Hong Kong-based chief China economist for JPMorgan Chase & Co. The possibility of another interest-rate cut this year is getting “quite small,” though the central bank may cut lenders’ reserve requirements, Zhu said.
China’s economic growth has started to stabilize, Premier Wen Jiabao said in remarks published yesterday by the official Xinhua News agency. The government is confident of achieving annual targets and the economy will continue to show “positive changes,” Wen said, according to Xinhua.
The Shanghai Composite Index, the country’s benchmark stock gauge, rose 0.5 percent at 10:29 a.m. local time. The index had slumped about 14 percent from this year’s high on March 2 on concern the government isn’t loosening monetary policy or introducing stimulus policies fast enough.
The economy expanded 7.7 percent in the first three quarters from a year earlier, the statistics bureau said. Wen set a full-year growth target of 7.5 percent in March, the lowest goal since 2004.
Industrial production increased 9.2 percent in September from a year earlier, rebounding from a three-year low of 8.9 percent expansion in August, today’s statistics bureau report showed. Economists surveyed by Bloomberg News forecast a 9 percent gain, based on the median estimate.
Retail sales advanced 14.2 percent in September from a year earlier, the most since March, compared with the 13.2 percent median estimate. Fixed-asset investment excluding rural households rose 20.5 percent in the first three quarters, higher than the 20.2 percent median forecast in a survey.
Rio Tinto Group, the world’s third-biggest mining company, said last month it expects economic growth in China to accelerate toward the end of the year as the biggest global metals consumer eases credit restrictions and boosts spending. China generated 31 percent of Rio’s sales last year.
Even with the improvement, “I do not see China bouncing back quickly” because private investment is fleeing on rising labor costs and overcapacity, said Tao Dong, Credit Suisse Group AG’s Hong Kong-based head of Asia economics excluding Japan. “Public spending is no substitute to private investment and monetary easing cannot fix structural problems.”
Coca-Cola Co., the world’s largest soft-drink maker, this week said volume sales growth of 2 percent in the third quarter trailed the 6 percent pace of the first three quarters combined. “It is reasonable to expect that China’s ongoing economic slowdown may have a short-term effect on our industry and on our business,” Chief Executive Officer Muhtar Kent said during a conference call.
