Recently, the Chinese Communist Party announced that the GDP growth in the first three quarters of the year was 4.6%. However, analysts believe that China’s economy is facing an imbalance with hot exports but weak domestic demand intensifying.
According to data released by the Chinese National Bureau of Statistics on October 19, the GDP for the first three quarters totaled 107.107 trillion yuan. By constant prices, this represented a 4.6% year-on-year growth. Breaking it down by sectors, the value added of the primary industry was 5.8994 trillion yuan, a 3.7% increase; the secondary industry added value stood at 38.3822 trillion yuan, up by 3.8%; the tertiary industry added value reached 62.8255 trillion yuan, with a growth of 5.2%. Looking at each quarter separately, the year-on-year GDP growth was 5.0% in the first quarter, 4.3% in the second quarter, and 4.5% in the third quarter. Quarter-on-quarter, the GDP growth in the third quarter was 1.2%.
The primary sector mainly includes agriculture, forestry, animal husbandry, and fisheries; the secondary sector encompasses industrial manufacturing that processes natural resources and raw materials, such as mining, manufacturing, electricity, gas, water production and supply, and construction; and the tertiary sector is the broad service industry covering all other sectors excluding the first and second industries, including commerce, finance, real estate, transportation, communication, and modern services.
The official data released by the CCP exceeded the predictions of industry institutions. According to a Reuters survey of 50 economists, the average GDP growth forecast was 4.4%, which was also the average prediction from nine domestic and international institutions surveyed by Caixin.
The BBC reported that aside from China’s macroeconomic data in the first three quarters, ordinary people might feel a disparity in living conditions. Gasoline prices in September rose by 16.6% year-on-year; driven by the artificial intelligence boom, data storage equipment prices increased by 46.7%, computers by 21.8%, and mobile phones by 14.9%.
Analysts generally agree that the current Chinese economy is showing an “external heat, internal cold” phenomenon: exports and high-end manufacturing are driving economic growth, while domestic consumption, investment, and the real estate market remain weak. They also warn that the risks of relying on a single external demand engine are accumulating, Beijing’s stimulus space is limited, and they may not be willing or able to significantly boost it at this point.
Moody’s Analytics commented that the main driver of China’s GDP rebound is exports. However, China’s economy currently relies too heavily on a single external growth engine, which is showing signs of fatigue.
According to Associated Press reports, China’s internal situation is facing challenging issues. Max Zenglein, a senior economist for the Asia-Pacific region at the US think tank The Conference Board, stated that official data is increasingly unable to reflect the overall operation of the Chinese economy as it masks the growing disparities between industries, regions, and households. Managing the imbalance in the domestic economy for Beijing may be more challenging than responding to external pressures.
Reuters reported that analyst Andy Ji from ITC Markets said, “There is a severe imbalance in economic growth structure… Economic growth is mainly driven by exports and government intervention. Domestic demand has not yet formed self-sustaining growth momentum, and there is no sign of a turnaround in the real estate market.”
Sheana Yue, senior economist at the Oxford Economics Research Institute, stated that if consumption and investment continue to be weak, even with a slight acceleration in GDP growth, “we will proceed with caution and not easily interpret it as evidence of full economic recovery.”
Michelle Lam, chief economist for the Greater China region at Societe Generale, expressed her views saying that “China’s expanded exports are not limitless”. Without taking decisive policy shifts to support household income and consumption, China may face the dilemma of long-term low inflation and low economic growth.