China’s economy at a glance – October
China’s latest national accounts data showed a slowing trend for China’s economy in the September quarter falling below the annual growth target for the first time this year. As a result, we are revising our forecasts for China’s growth.
Services underpin China’s growth, but forecast is lower, with industry continuing to soften
- China’s latest national accounts data showed a slowing trend for China’s economy in the September quarter – with gross domestic product rising by 6.9% yoy – falling below the annual growth target for the first time this year. Reaching China’s annual growth target appears more challenging following the latest data release. As a result, we are revising our forecasts for China’s growth – to 6.9% for 2015 (7.1% previously) and 6.7%for 2016 (6.9% previously).
- Weakness in the industrial sector remains evident – China’s industrial production growth slowed to 5.7% yoy (from 6.1% in August), while fixed asset investment slowed to 6.8% yoy (from 9.2% previously) – the lowest rate of growth since December 2002.Slowing investment in the real estate and manufacturing sectors has been the key driver of this trend.
- Services remain the main engine for growth, and real retail sales growth accelerated –at 10.8% yoy (compared with 10.3% previously), around trend levels over the past few years.
- China’s trade surplus edged marginally wider in September – with weaker imports (in year-on-year terms) raising concerns around the health of the broader Chinese economy. These concerns are somewhat overblown, given the impact of falling commodity prices on import values.
- China’s new credit expanded in September – totalling RMB 1.3 trillion (compared with RMB 1.1 trillion in August) – almost 14.5% higher in year-on-year terms. Recent month shave seen an expansion in overall credit, in stark contrast to the declines across the first half of the year.
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