3Q GDP remained stable at 6.7% YoY.
China's gross domestic products (GDP)posted steady expansion at 6.7% y/y in Q3, although industrial production (IP) growth inched down in September.
Standard Chartered (SC) commented that both current and forward-looking indicators bode well for Q4, but the property sector faces headwinds.
Moving forward, it maintains its annual growth forecast of 6.8%, expecting a moderate pick-up in Q4 on a weaker CNY, supportive policies and a low base.
Here's more from SC:
China’s GDP grew 6.7% y/y in Q3-2016, flat versus H1-2016, consistent with market expectations and within the target range of 6.5-7.0%. The services sector continued to expand faster than the rest of the economy, by 7.6% in the first nine months, contributing 53% of the economy. Consumption has contributed 4.8ppt to growth YTD, while the contribution from net exports has stayed negative (-0.5ppt). The survey-based unemployment rate fell below 5% in September for the first time since mid-2013, underpinning stable consumption growth.
Both our current and forward-looking indicators suggest healthy growth momentum, although the recent property tightening measures may pose downside risks. Our growth momentum tracker shows more improvement than deterioration in both August and September. Fixed asset investment (FAI) accelerated to 9.0% y/y in September from 8.2% y/y in August, benefiting from an improvement in private and property investment and resilient infrastructure investment. Planned investment under new projects and funds secured for investment also point to strength. However, the property tightening measures have already led to a decline in transaction volumes in early October, creating headwinds for Q4 growth
We maintain our 2016 GDP growth forecast of 6.8%. Fiscal policy has remained expansionary, with spending growing twice as fast as revenue YTD. Credit has expanded by 12-13%, much higher than nominal GDP growth of 7-8%. We expect stable sequential growth toward the year-end, supported by policies and a weaker Chinese yuan (CNY), which should boost y/y growth to 6.9% in Q4 off a low base.
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