China’s gross domestic product rose 3.9 percent year-on-year in the third quarter, well below its annual target and revealing the scale of the economic challenges facing the country.
The year-on-year growth rate, which analysts polled by Bloomberg had expected at 3.3%, is below China’s annual target of 5.5% – already its lowest in three decades.
China’s economy is grappling with a real estate crisis and strict zero-Covid controls and lockdowns, which have largely curbed the spread of the virus but also crippled consumer activity.
Monday’s data release helped spur a broad sell-off in Chinese stocks, with the Hang Seng China Enterprises Index in Hong Kong falling 5.7% and the benchmark CSI 300 index of stocks listed in Shanghai and Shenzhen falling. as much. like 2 percent.
“It’s panic selling,” said Dickie Wong, head of research at Kingston Securities in Hong Kong. “Obviously, investors are just not confident about the future of the Chinese economy.”
The data release, delayed from last Tuesday, comes after Chinese President Xi Jinping extended his rule for an unprecedented third term and tightened its grip on political power at the 20th Communist Party Congress last week.
Although the government offered no explanation for the delay, the move was widely seen as an attempt to avoid distracting from the congress, which takes place once every five years and shuffles the top echelons of the Communist Party.
During the congress, Xi made little reference to China’s economic weaknesses and praised coronavirus control measures, which include near-daily testing and quarantine rules that have effectively closed the country to the rest of the world. In preparation for the event, China’s top epidemiologist said there was no schedule for relaxation.
Third-quarter growth outpaced the second-quarter increase of just 0.2%, when Shanghai, China’s largest city and financial hub, was placed under a severe two-month lockdown.
In September, retail sales rose just 2.5%, missing a Reuters forecast of 3.3%.
Industrial production, which fueled Chinese growth in the first two years of the pandemic, rose 6.3% last month. That was better than analysts’ expectations of 4.5% as the country’s manufacturing industry recovered from crippling supply chain disruptions and lockdowns.
Investments in fixed assets increased by 5.9% during the first nine months of the year. However, property sales, measured by area, fell 22% and new construction starts fell 38% while property investment fell 8%.
This year, policymakers have gradually eased key rates and taken steps to speed up the completion of unfinished housing projects, which have been delayed after a series of defaults by highly indebted developers such as Evergrande.
But they have halted before implementing major stimulus measures and now face a weakening currency and a domestic stock market that lost 34% after factoring in the renminbi’s fall against the greenback.