US exports fall
China’s economy is growing more slowly
A real estate crisis, the trade dispute with the USA and weakened consumer sentiment are slowing China’s economic growth. Further negotiations regarding the customs dispute are expected to take place shortly.
China’s economic growth slowed in the third quarter of this year. The gross domestic product (GDP) increased by 4.8 percent from July to September compared to the previous year, said the National Statistics Office. In the first two quarters, China’s gross domestic product (GDP) grew by 5.4 percent and 5.2 percent, respectively.
Economists blame ongoing domestic problems, such as the real estate crisis and subdued consumer sentiment, for the slowing momentum. “Household spending is also being held back by the ongoing decline in property prices, which are at their sharpest decline in a year,” said Evans-Pritchard, an analyst at Capital Economics.
Exports support the economy
Against this background, exports remain an important pillar of the Chinese economy. So far, China has managed to diversify away from the US market. US exports fell by 27 percent last month compared to the previous year. However, deliveries to the European Union (plus 14 percent), Southeast Asia (plus 15.6 percent) and Africa (plus 56.4 percent) increased.
Nevertheless, trade tensions with Washington are weighing on sentiment. A spokesman for the statistics office said the economy had held its own in a difficult environment: it had “withstood the pressure and made hard-won progress”.
Growth target remains at five percent
China has set a growth target of around five percent for the year as a whole. China is on track to achieve this year’s growth target, the Reuters news agency quotes Lynn Song, China expert at ING. “But weak confidence, reflected in weak consumption, investment and a worsening downturn in house prices, still needs to be addressed.”
Experts point out that the growth is being driven to a significant extent by state-financed investments. What is striking is that prices are falling despite a still relatively high growth rate. Such deflation is seen as a sign of consumer restraint and overcapacity in industry.
Focus on Independence
The Central Committee of the Communist Party is meeting in Beijing today. At the so-called fourth plenum, the economic guidelines for the coming years are to be determined by Thursday. These will ultimately result in a new five-year plan, which is to be approved at the People’s Congress in March.
The current challenges indicate that the focus of the new roadmap will continue to be “on economic and technological independence and leadership,” according to an assessment by the China Institute Merics in Berlin.
Innovation and security of supply in strategic sectors are more important to the party leadership than measures to strengthen incomes and promote consumption. However, these are topics that are likely to play an important role in the planning.
Meeting planned soon between China and USA
According to Beijing, representatives of China and the USA will meet as soon as possible for new negotiations in the trade dispute. As China’s official news agency Xinhua reported, Vice Premier He Lifeng, who is responsible for economic and trade relations with the US in China, had a video link with US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer.
Both sides spoke “openly, in-depth and constructively” about key issues in bilateral economic and trade relations. It was agreed to hold a new round of economic and trade consultations as soon as possible, it said.
