Growth in China gained a little momentum over the summer, and once again it was the factory floor and foreign buyers that did the lifting. Official data published on Monday put third-quarter growth at 4.5% compared with a year earlier, up from 4.3% in the spring, which had been the weakest reading in three years. Analysts polled by Reuters had pencilled in 4.4%.
Over the first nine months, output rose 4.6% to about 107 trillion yuan, inside Beijing’s target band, which runs from 4.5% to 5%. The statistics bureau highlighted the new industries: high-tech manufacturing grew more than 14%, and factories turned out about 29% more robots, roughly 40% more lithium-ion cells and some 63% more 3D printers. Exports pulled so far ahead of imports that the monthly surplus hit an all-time high of $133.5 billion.
The other half of the picture is far less shiny. Investment in property development fell more than a fifth between January and September, and overall fixed-asset investment dropped 7.2%. Shop tills barely moved, with consumer spending up only 1.1% in September. Producer prices rose 5%, the steepest climb in over four years, while consumer inflation stayed under 1%, a sign that companies cannot pass higher costs on to cautious shoppers.
Economists are split on what comes next. Tianchen Xu of the Economist Intelligence Unit expects the trio of state investment, strong exports and a weak comparison base to carry into the final quarter and sees 4.7% for the year. Sheana Yue of Oxford Economics warned that the long housing crisis will keep stopping industrial strength from spreading to households. Cornell’s Eswar Prasad fears the solid number may make Beijing too relaxed about reforms.
The government has already reached for some tools: selective interest rate reductions and support for home loans at the end of September, and this month an extra 550 billion yuan of borrowing room for local governments. Bigger stimulus now looks less likely.
