China’s Economic Growth Slows in Q3 2024: Struggles Persist Despite Policy Measures
China’s economy grew by 4.6% in the July-September 2024 quarter, as reported by the National Bureau of Statistics. While this marks a slight slowdown from the 4.7% growth in the previous quarter, it still falls short of the government’s target of 5% for the year. Analysts warn that without stronger measures to stimulate consumer demand and revitalize the ailing property sector, achieving this target may become increasingly difficult.
Policy Efforts to Stimulate Growth
In response to the economic slowdown, the Chinese government has introduced several policies to boost economic activity, including:
- Mortgage Rate Cuts: The government has cut mortgage rates for existing homes to encourage the real estate market.
- Reserve Requirement Reductions: The People’s Bank of China (PBOC) lowered the reserve requirement ratio (RRR) for banks to increase liquidity in the financial system.
Despite these efforts, the government has yet to unveil a comprehensive stimulus plan, leading to skepticism among analysts and investors about the economy’s ability to pick up pace.
For more on China’s economic measures, see China’s Economic Stimulus Plan.
Property Sector Dragging Economic Performance
The property sector, which plays a central role in China’s economy, remains a significant drag on overall performance. Key indicators show persistent weakness in the housing market:
- Property Investment: Fell by 10.1% in the first three quarters of 2024.
- New Home Sales: Dropped by 22.7% compared to the previous year.
While there were gains in other sectors, these were insufficient to offset the struggles in real estate:
- Factory Output: Increased by 5.8%.
- Retail Sales: Rose by 3.3%.
However, these positive numbers have been overshadowed by the continued challenges facing the housing market.
Financial Market Moves: A Rally Amidst Concerns
To stabilize the financial markets, China’s state-run banks took action by reducing deposit rates, while the central bank introduced guidelines aimed at assisting companies and shareholders with stock repurchases. These moves triggered positive reactions in the stock market, with:
- Shanghai Composite Index rising by 2.1%.
- Shenzhen Market gaining 2.4%.
While these rallies offer some optimism, the broader economic outlook remains uncertain. Analysts warn that without more significant government intervention, economic growth could slow further in 2025.
For further insights on the current economic situation, refer to China’s Property Market Struggles.
Conclusion: Challenges Ahead for China’s Economy
China’s economic growth in Q3 2024 continues to be impacted by weak demand in the property sector and limited consumer confidence. While the government has implemented some measures to stimulate growth, more aggressive actions may be needed to reach its 5% growth target for the year. As the property sector continues to face challenges, the outlook for China’s economy in 2025 remains uncertain, and much will depend on the effectiveness of upcoming fiscal and monetary policies.
