China growth momentum worse than headline figure: ANZ

October 18, 2019

HONG KONG - With China's GDP having expanded 6.2% on a year-to-date basis in Q3, ANZ Bank believes it is likely that the economy will maintain full-year growth at 6.0% in 2019, unless GDP growth falls below 5.5% y/y (or 1.0% q/q) in Q4.

"In nominal terms, China's GDP growth has retreated to 7.6% y/y in Q3 from 8.3% in Q2, signalling that the economy is slowing at a quicker pace than the headline figure indicates," ANZ says.

"We also notice that China's industrial production (IP) data tends to rise at quarter-ends in 2019. For instance, the headline growth rates rose by 1.4% in September, and by 1.3% in June.
"The increase in retail sales in September does not point to a broad-based recovery in consumption.
"To further support economic growth, fiscal policy is the only viable tool. However, Chinese policymakers will also need to address existing funding constraints faced by local governments" (ATI).