Despite the attempts to revive Beijing, the Chinese economy has slowed. In the third quarter, annual growth was 4.6%, compared to 4.7% in the previous quarter. These figures, which are high in absolute terms, remain below the 5% target set by the Chinese authorities. Nevertheless, other indicators point to the first effects of the wave of stimulus announced in recent weeks.
In September, industrial production was up again (+5.4% compared to +4.5% the previous month), and retail sales showed signs of life (+3.2% compared to 2.1%). Growth is expected to rebound in the fourth quarter, especially as the unemployment rate is downward (5.1% in September compared with 5.3% in August).
However, we must avoid any euphoria
Also, real estate prices worsened in September, falling by 5.8% over a year. As we know, real estate has long been the savings of choice for Chinese families. Stabilising this market will present the wealth effect that Chinese households have long benefited from, and any return of confidence will remain fragile.
Aware of the problem, authorities announced yet another sector-specific aid plan this week, allowing local governments to issue debt for real estate purchases to bring the market back into balance. While they are adjusting the market very gradually, it is also true that the accumulation of measures already announced should begin to weigh on this market.
While China is not yet out of the woods, it is taking steps to address its problems. We continue to invest in it across all our portfolios.