China’s Economy Likely Grew at Weakest Pace in Six Quarters

(Bloomberg) -- China’s economy likely grew at its weakest pace in six quarters, prompting Beijing to roll out a swath of stimulus measures in late September to draw a line under the slowdown. 

Data on Friday is set to show the economy expanded 4.5% in the third quarter from a year ago, according to economists surveyed by Bloomberg. That would be the least since March 2023, though it should keep expansion for the first nine months at 4.9%, in line with Beijing’s annual goal of around 5%.

The figures highlight the weakness of the world’s second-biggest economy just before policymakers unveiled measures including interest rate cuts and ramped up support for property and stock markets since late September. The measures prompted a historic stock rally and led banks including Goldman Sachs Group Inc. to upgrade their forecasts for China’s growth. 

However, after a series of press conferences this month in which policymakers offered no details of fresh spending plans, fears are now mounting that Beijing’s stimulus efforts will not be enough to revive growth. The next key event is a press briefing by the housing minister on Thursday.  

Investors are also watching a meeting of China’s top legislative body — the National People’s Congress Standing Committee — later this month or early November as any extra fiscal budget or bond quota will require its approval.

With China’s slowdown deepening, it shows “the need for policymakers to move swiftly in executing the powerful stimulus package announced near the end of last month,” Bloomberg Chief Asia Economist Chang Shu said in a note.

The National Bureau of Statistics is set to release September and third-quarter economic data on Friday at 10 a.m. local time. Key indicators are expected to remain weak or little changed from the previous month. 

Here’s what to expect: 

Data released for September so far have been dismal. Exports slowed sharply, curbing a trade rebound that has been a bright spot for the economy. Deflationary pressures continued to build, with consumer prices unexpectedly easing and factory-gate prices extending declines.

But there’s little indication authorities feel any urgency to ramp up consumption, which many economists see as essential to reflating the economy and putting it on a more positive growth trajectory. At a closely watched Ministry of Finance briefing on Saturday, officials offered only limited direct consumption boost and no large-scale handouts — something Beijing has long resisted due to concerns over what it calls “welfarism.”

The sluggish third-quarter performance will put more pressure on the final three months of the year. President Xi Jinping called on government officials to “make every effort” in the fourth quarter to help the economy meet its annual growth target, state media reported on Wednesday.

The stock market has been on a roller-coaster ride, with the benchmark CSI 300 Index soaring to its highest level since July 2022 in early October, before falling about 10% since then. As Beijing takes its time detailing a fiscal spending plan, skepticism is growing whether authorities are willing to deploy greater firepower to turn around the economy and markets.

“A large-scale, consumption-focused package aimed at driving decisive reflation is unlikely,” Morgan Stanley economists including Robin Xing wrote in a note on Oct. 13. 

“While Beijing is progressing with restructuring debt and rekindling private sector confidence, reflation and rebalancing with consumption stimulus is expected to be slow and bumpy,” the economists added. 

--With assistance from Fran Wang.

(Updates with Xi’s comments.)

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