China Center Data Flash: PBoC action belies the relatively positive Q3 GDP print

Data Flash is a brief interpretive summary of China’s official monthly economic data release.

On Monday October 19th, the NBS released its official third quarter real GDP growth number, which came in at 6.9 percent year-over-year for the three-month period. The release came in just above market expectations of 6.8 percent, and slightly below the 7 percent real GDP growth that was reported for the first two quarters of the year.

But despite the positive GDP print, only four days later on October 23 the People's Bank of China enacted the sixth cut to benchmark interest rates of this easing cycle (which began back in November 2014) and the fourth cut to banks' reserve requirements. The fact that the central bank cut rates so soon after the third quarter data release indicates that the slight reduction in officially reported real GDP growth does not reflect the true amount of downward pressure that the economy is facing—an assertion that is further underscored by visible weakness in many component parts of the official GDP estimate.