SHANGHAI — China, the world’s second largest economy, saw its third-quarter gross domestic profit grow 7.4 percent — its slowest expansion rate in more than three years.
The data indicates that China’s economic momentum is waning but it might also be bottoming out. China’s economy grew 7.6 percent in the second quarter and 8.1 percent in the first quarter of 2012. The National Bureau of Statistics released the July to September figures on Thursday.
Economists claim there are signs of a possible recovery that could lead to an end-of-year rebound. In September, retail sales expanded 14.2 percent year-on-year while industrial output grew 9.2 percent year-on-year from a 39-month low of 8.9 percent in August, the statistics bureau said. Both figures exceeded market expectations. Retail sales expanded 13.2 percent in August compared to the previous year.
Retail growth in September was partly fueled by consumer spending on travel and shopping ahead of the recent Golden Week holiday, a week-long break at the beginning of October.
“September’s improvement is faster and stronger than expected, implying that the recent acceleration of policy easing- both the approval of infrastructure projects and improving liquidity conditions — is feeding through to generate new demand,” Sun Junwei, China economist for HSBC, said in a research note. “As we expected, infrastructure-led investment growth is offsetting the weakness in other sectors, becoming a key driver for the rebound of investment growth.”
Beijing has loosened lending requirements for banks and approved more infrastructure projects in efforts to stimulate the economy. Over the summer, authorities cut interest rates twice.
“China’s growth is bottoming out thanks to the effects of earlier easing measures,” Sun said. “We expect further filtering-through of policy easing to generate a mild growth recovery in coming quarters.”
He said domestic demand is crucial for China’s recovery given ongoing financial woes in Western economies will continue to pose challenges for the country’s export-oriented manufacturing base.
During economic meetings earlier this week, Chinese Premier Wen Jiabao said the government is confident that the economy is “showing signs of stabilizing and will continue to show positive changes,” the state Xinhua news agency quoted him as saying.