China's GDP grows 6.7% in Q3 on account of govt spending, property boom

The Dollar Business Bureau

In line with the Chinese government and industry expectations, China’s economy expanded at 6.7% in the third quarter from a year earlier, as the increased government spending and real estate boom balanced out weak exports.

Real estate investment growth registered a slight growth during January-September period, as it grew by 5.8% compared to 5.4% over the first eight months of the last year. Despite a significant growth, the market is wary of the sector’s future growth rate owing to real estate price surge.

Several analysts earlier predicted that China’s economy was stabilizing and expanding at the same pace as it did in the first and second quarters of the current financial year and is in line with the government's target growth for the ongoing fiscal.

However, the world’s second-largest economy is heavily dependent on government spending in the country’s current economic environment. Several domestic factors such as slumping private investment, rising debt levels and property market correction risks have been keeping global investors on edge.

According to official data, consumption accounted for 71% of GDP growth during the first three-quarters of the year, as against 66.4% in 2015. The increase in consumption played a balancing role amid the country’s contracting net exports.

The National Bureau of Statistics said China’s economy registered a 1.8% growth quarter-on-quarter. The Chinese government has set a growth target of 6.5-7% for the ongoing year. The country’s GDP growth in 2015 was just 6.9%, which was also slowest in a quarter of a century.

The NBS said China’s economic growth continues to face many uncertain hurdles and that the foundation for sustained economic growth is not solid.