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Frank Chen

All eyes are on China’s third quarter economic data release on Friday as a gauge to whether the “around 5 per cent” full-year growth goal is still within grasp.
Stakes are seen to be higher than ever as the window for stimulus is seen to be closing and Beijing is being urged to do more to jolt the world’s second-largest economy.
Questions have been raised if more stimulus is needed, but analysts said it is already too late for Beijing to tread the old path to reboot the economy if its goal is to only ensure this year’s growth target is met.
But there is a window of opportunity, they added, to reorient stimulus towards the long term to boost incomes, spending and sentiment.
“Third-quarter numbers will likely disappoint more and underperform the second quarter’s 4.7 per cent year on year growth, piling on Beijing’s woes,” said Chen Zhiwu, chair professor of finance at the University of Hong Kong.
“This is why Beijing has been proactively introducing stimulus at the end of the third quarter.
“Policymakers are very concerned about two consecutive quarters of sub-5 per cent performance.”


China’s third quarter economic growth could slacken to 4.1 per cent year on year, according to an estimate by Japanese investment bank Nomura, while they said the gross domestic product deflator would remain negative amid tepid domestic demand and investment.
A recent Reuters survey of economists put China’s third quarter growth at 4.5 per cent compared to a year earlier, which would be the weakest since the first quarter of 2023.
But Goldman Sachs has raised its 2024 real GDP forecast from 4.7 to 4.9 per cent after Beijing launched its latest round of stimulus measures.
With less than three months remaining for Beijing to turn the tide on the economic slowdown, Beijing has ditched the inertia, and has stepped up its efforts since the end of September.
China’s central bank fired the first salvo of the biggest stimulus in years with larger-than-expected cuts to interest and mortgage rates and the reserve requirements ratio, before ministries with a hand in economic affairs unveiled a succession of measures.
Last week, the National Development and Reform Commission vowed effective policy implementation to achieve this year’s growth.
And on Saturday, the Ministry of Finance announced measures including raising debt ceilings, tapping funding from unused bond quotas and fiscal support for the property market.
It’s not too late if the objective is to rekindle growth over time via progressive roll-out of measures and effective implementation
Li Jin, Renmin University of China
“Beijing’s stimulus has somehow come a bit late,” said Li Jin, an academic with the Renmin University of China.
“The effects could have been there to boost third-quarter data had Beijing launched stimulus early, like in the summer.
“Beijing ought to have acted when previous small fixes, like consumer goods trade-in, became inadequate to spur a recovery.”
Li also warned that the near-term outlook would remain grim, but argued stimulus, including investments, are intended not just for growth in 2024.
“It’s not too late if the objective is to rekindle growth over time via progressive roll-out of measures and effective implementation,” added Li, who is also deputy director at the China Enterprise Reform and Development Society.
“It’s not a one-off deal and more is in the pipeline. The downturn will be more effectively reversed next year.”


Monetary and fiscal policymakers, when announcing recent measures, have stressed an ample toolbox is available, with new initiatives in the works.
Other analysts said the issue was not just about timing, as that the economic ills cannot be cured by old stimulus, with a long-overdue shift of focus needed to open up new windows.
“It’s past time for Beijing to use investments to stimulate the economy as there is overcapacity almost everywhere,” added Chen at the University of Hong Kong.
“Beijing should instead help solve the money problem facing both local governments and many consumers.”
Tomoo Marukawa, a professor specialising in the Chinese economy at the University of Tokyo, said existing stimulus lacked new thinking as it again boosted the supply side, including interest rate cuts to encourage corporate investments and more local bonds to invest in infrastructure.
“The current woes cannot be tackled by old prescriptions,” Marukawa said, adding that the next dose of stimulus should have a laser focus on income and spending.
The US election and a brewing trade war with the EU is hard to reverse and will drag the recovery and negate some of the boost from the stimulus
Chen Zhiwu, University of Hong Kong
A more fundamental stimulus would induce a broad wage rise, minimum wage adjustments and measures to increase rural residents’ income and drive urbanisation to help the property sector.
“It’s totally worth doing and never too late,” he added.
Beijing also needs to think about offering direct subsidies to all households, while it could expand the goods trade-in programme to cover more residents and more consumer goods, Marukawa said.
But even with stimulus starting to pay off in the final quarter, analysts have also warned Beijing is braced for external shocks, including from the United States and European Union.
“The US election and a brewing trade war with the EU is hard to reverse and will drag the recovery and negate some of the boost from the stimulus, which in turn makes introducing more stimulus urgent,” Chen added.


China’s economy sees slowest growth in more than a year as GDP rises 4.6% in third quarter

China stimulus ‘should absolutely surpass’ 10 trillion yuan, government economist says

The world is watching China’s stimulus package, and trade relations are in the spotlight

China’s property briefing to shore up confidence falls short

China GDP

China’s GDP set to underperform in third quarter, adds to urgency for more stimulus

Workers at a construction site in Huaian, in eastern China’s Jiangsu province. Photo: AFP

An employee works at a factory producing stainless steel materials in Qingzhou, in eastern China’s Shandong province. Photo: AFP

Chinese economist calls for massive stimulus, saying 2008’s 4 trillion yuan not enough

=== PHOTO CAPTURED FROM WEIBO === The comments from Yu Yongding, an outspoken economist at the Chinese Academy of Social Sciences, came as a growing number of academics and advisers openly express worries about the safety of China’s overseas assets. WEIBO

Yu Yongding, an economist known for his candor, has said the size of an effective stimulus package should outstrip the enormous bundle spent to offset the 2008 financial crisis. Photo: Bund Summit

China looks to tackle problems for debt-ridden local authorities with water tax reforms

Water gushes out from the Three Gorges Dam through nine of its flood discharge gates to spare more capacity for incoming floods from upper reaches of the Yangtze River in central China’s Hubei province. Photo: Xinhua

Residential buildings are reflected on the water as people fish in a river in Hechi in China’s Guangxi Zhuang autonomous region. Photo: Reuters

Nobel Prize-winning research pushes Chinese economists to call for institutional reforms

Members of the Nobel assembly announce the 2024 prize in economics, awarded to Daron Acemoglu, Simon Johnson and James A Robinson, seen on screen, during a press conference in Stockholm on Monday. Photo: TNS

Members of the Nobel assembly announce the 2024 prize in economics, awarded to Daron Acemoglu, Simon Johnson and James A Robinson, seen on screen, during a press conference in Stockholm on Monday. Photo: Xinhau

How big is Beijing’s war chest, and why does a headline stimulus figure remain elusive?

To empower debt sales, China’s finance ministry has set up a working-group mechanism with the People’s Bank of China (pictured). Photo: Reuters

China’s finance minister, Lan Foan (centre), appears at a press conference in Beijing on Saturday. Photo: AFP

Can China find a way around US restrictions on hi-tech computer chips?

Illustration: Henry Wong

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China set to release its third quarter gross domestic product data on Friday following a recent raft of stimulus measures


China set to release its third quarter gross domestic product data on Friday following a recent raft of stimulus measures.


China economy

China's economic recovery

China’s economic stimulus