Growth slowed in the third quarter

On October 18, China's third-quarter GDP, retail sales, unemployment rate and industrial production data attracted investors' attention. The economy grew 4.6% in the third quarter, lower than the 4.7% in the second quarter of 2024, but slightly higher than economists' expectations of 4.5%, far below the government's growth target of 5% in 2024.

Despite the slowdown in economic growth, other economic indicators show signs of a modest recovery in the fourth quarter of 2024:

• Retail sales grew 3.2% year-on-year in September, up from 2.1% in August.
• Industrial production grew 5.4% year-on-year, up from 4.5% in August.
• The unemployment rate fell from 5.3% in August to 5.1% in September.

Fiscal stimulus measures

Recently, the People's Bank of China and the government have introduced a number of stimulus measures to boost the economy, but the market reaction has been mixed. Although the focus is on increasing credit and supporting the real estate sector, there are still concerns about consumers' willingness to borrow and spend.

In addition, weak external demand further dampened China's growth prospects. In September, China's exports grew 2.4% year-on-year, a sharp drop from 8.7% in August. Imports grew by just 0.3%, indicating weak domestic and external demand.

Expert Views

Alicia Garcia Herrero, Asia economist at Societe Generale, commented on the recent stimulus package: "China's first round of stimulus measures was mainly a rescue plan for developers, not consumption. Up to 4 trillion yuan (about 562 billion US dollars) of financing was used for housing projects on the "white list". This white list was introduced in January this year and contains projects and developers that are eligible for further funds from local and state-owned banks to help them complete unfinished projects. So far this year, a total of 2.2 trillion yuan (about 313 billion US dollars) of loans have been approved for white list projects, but the economy has not seen significant improvement. In other words, don't expect a recovery from this."

Market reaction

The Hang Seng Index had a mixed reaction after the release of the economic data, reaching a high of 20,269 points before falling to 20,147 points. On October 18, the Hang Seng Index rose 0.34% to 20,147 points.

In the foreign exchange market, economists regard the Australian dollar as a barometer of the Chinese economy. Before the data was released, the Australian dollar briefly fell to $0.66929 against the U.S. dollar, and then rose to a high of $0.67069.

But after the data was released, AUD/USD climbed to a high of $0.67107, and then fell to $0.67011. On October 18, AUD/USD rose 0.14% to $0.67046.