Background on China’s Economic Slowdown
China experienced its slowest economic growth in a year during the last quarter, according to official data, as top leaders convened in Beijing for a highly anticipated policy-planning meeting.
Key Data Points
- Gross Domestic Product (GDP) growth for July-September was 4.8% annually, down from 5.2% in the previous quarter.
- This marks the slowest growth since the same period last year, when GDP grew by 4.6%.
- The slowdown is attributed to stagnant domestic consumption, declining housing prices, and reduced investment in fixed assets.
Reasons for the Slowdown
Experts suggest that China needs to shift towards a growth model driven by domestic spending rather than exports and manufacturing, given the rising trade pressure.
Transition to Domestic Consumption-Driven Growth
This transition is expected to be discussed during the “fourth plenum” policy meeting held this week in Beijing.
Details of the Upcoming Policy Meeting
State media and Chinese officials have remained tight-lipped about specific political proposals included in China’s 15th Five-Year Plan, the main topic of this week’s meeting.
Focus on Population Sustenance
According to Xinhua, the new plan (covering 2026-2030) will focus on “strengthening the population’s livelihood bases,” including “investing in people.”
Factors Contributing to the Slowdown
Decline in Domestic Consumption
Domestic spending has stagnated in recent years, failing to fully recover from the Covid-19 pandemic.
Falling Housing Prices
New home prices dropped in September in 61 out of 70 surveyed cities, according to the National Bureau of Statistics (NBS), indicating buyer caution in the housing market.
Reduced Investment in Fixed Assets
Investment in fixed assets saw a slight annual decline of 0.5% in the first three quarters, due to a significant downturn in real estate investment.
Slowing Retail Sales
NBS reported that retail sales growth fell to 3.0% annually in September, in line with Bloomberg survey estimates but below August and the slowest since November.
Key Questions and Answers
- Q: What is the current state of China’s economic growth? China’s GDP growth slowed to 4.8% annually in the July-September quarter, down from 5.2% in the previous quarter, marking its slowest growth since the same period last year.
- Q: Why is China’s growth slowing down? Experts suggest that China needs to transition towards a growth model driven by domestic spending rather than exports and manufacturing, given rising trade pressures.
- Q: What topics will be discussed at the upcoming policy meeting? The “fourth plenum” in Beijing will likely focus on strengthening population livelihood bases, including investments in people, as part of China’s 15th Five-Year Plan.
- Q: What factors are contributing to the slowdown in China’s economic growth? Declining domestic consumption, falling housing prices, reduced investment in fixed assets, and slowing retail sales are all contributing to China’s economic slowdown.
