Despite China’s Better-Than-Expected GDP Growth, Markets Are Unimpressed

Capital markets have operated with sheer pragmatism and appear to be immune to unsubstantiated rhetoric, writes former finance professor Tang Ya

Photo: VCG

On Wednesday, news of China’s economy made the headlines — the country’s GDP grew by 4.9% in the third quarter, surpassing the predicted 4.4%. Based on this, China’s GDP grew by 5.2% year-on-year in the first three quarters, putting annual growth of 5% well within reach given this trajectory.

Yet, data for September offers more nuanced insights, some upbeat and some not:

— Industrial output of large-scale industries showed a year-on-year increase of 4.5%, and from the month-on-month perspective, it grew by 0.36%. From January to September, the same figure rose by 4%.

— Retail sales for September amounted to 3.98 trillion yuan ($544 billion), a 5.5% surge year-on-year. Discounting automobile sales, the total is 3.54 trillion yuan — an uptick of 5.9%. For the nine-month period, the cumulative retail sales are 34.21 trillion yuan, a notable 6.8% climb. Excluding car sales, the increment touches 7%.

— From January to September, national fixed-asset investment (excluding rural households) totaled 37.5 trillion yuan, up 3.1%. Private investments in the same period were 19.33 trillion yuan, which represents a decline of 0.6%.

— The real estate market paints a starker picture: an investment downturn of 9.1% from January to September. Newly started construction projects declined by 23.4% and residential starts fell by 23.9%. Sales of commercial housing dipped by 7.5% while revenue dropped by 4.6%.