China: Annual growth disappoints the market – Westpac

Elliot Clarke, Research Analyst at Westpac, explains that the Chinese GDP disappointed market expectations in the September quarter, with the annual rate slowing from 6.7% at June to 6.5% currently.

Key Quotes

“The quarterly growth rate was reported as 1.6%, consistent with the first half average.”

“By sector, year-to-date contributions were also broadly in line with the outcomes at June. At 5.2ppts, consumption (both household and government) remained the prime support for growth.”

“While a touch below June’s 5.3ppts, this is still an abnormally strong outcome.”

“The 2018 outcome highlights just how important authorities’ push for quality growth which spurs gains in household income is for China’s future.”

“Albeit only available to June, the consistent robust tone of real estate and wholesale/ retail sector activity further highlights the significance of household demand to aggregate momentum, and hence job creation.”

“In stark contrast to the strength of consumption is the subdued tone of investment. From 2.9ppts two years ago, to 2.4ppts in 2017, and now 2.1ppts at September 2018, support for GDP from investment continues to slow.”