In this Aug. 7, 2003 file photo, a Chinese bank worker displays Chinese yuan at a bank in Beijing. AP
BEIJING, China — China’s economic growth likely eased in the third quarter but is on course to beat the government’s annual forecasts, analysts say, providing a boon for the Communist Party as it prepares to hand Xi Jinping a second term as president.
While the expected 6.8 percent rate in July-September is well off the breakneck figures enjoyed 10 years ago and weaker than the previous two quarters, it suggests the key driver of global expansion is stabilizing after years of slowing.
The estimate in a survey of analysts by AFP follows a series of positive indicators including increased domestic consumption, improving exports thanks to a pick-up in the global economy, and rising inflation.
“The government has tacitly allowed a mild pickup in credit growth to perk up activity ahead of the all-important congress,” said Alaistair Chan, an economist at Moody’s.
“The housing market is cooling at an orderly pace but activity there remains buoyant.”
However, an ever-expanding debt mountain continues to unnerve China-watchers and has already led two agencies to downgrade the country’s sovereign rating.
Total debt as a percent of gross domestic product has grown more than 10 percent per year on average since the 2008 financial crisis, according to International Monetary Fund estimates, and the head of the central People’s Bank of China Zhou Xiaochuan warned the country “needs to deleverage”.
Earlier this year the Bank for International Settlements — dubbed the central bank of central banks — warned China’s banking sector could be facing an imminent debt crisis, fueling fresh fears of a blowout that could hit the global financial system.
‘General disappointment’
There also are lingering worries of a possible trade war with the US following President Donald Trump’s protectionist rhetoric and accusations that Beijing is undermining US jobs.
The analysts surveyed by AFP said they saw the economy expanding 6.8 percent this year, in line with a recent IMF forecast but much better than the government target of around 6.5 percent.
The world’s number two economy grew 6.7 percent in 2016 — its slowest rate in more than a quarter of a century.
The official readings will be released on Thursday, a day after the Communist Party kicks off its twice-a-decade congress to rubber-stamp Xi’s second term and reshuffle its leadership.
However, analysts say his first five years, while promising so much such as further opening up the economy and overhauling lumbering state-owned companies, has fallen short of expectations.
“There has been general disappointment on economic performance and direction,” said Christopher Balding, economics professor at Peking University in Shenzhen, China.
“China is significantly more centralized than it was even five years ago. At this point, it would be very difficult for anyone to make a serious argument that China is seriously interested in opening up economically,” Balding told AFP.
Still, the PBoC’s Zhou told bankers and policy makers gathered in Washington at the weekend that he expects seven percent growth in the second half of the year, adding momentum “has rebounded”.
Analysts say China’s transition to from an economy based on exports and state investment to one driven by domestic consumption is well underway.
The slowdown in GDP growth mainly reflects the cooling property sectors as curbs bite, said Nathan Hung Lai Chow, a senior economist at DBS Bank.
“Consumption continues to be the main growth driver. That, along with robust public investment, will support China’s expansion.” /cbb