China Center Data Flash: Growth Broadly Steady in September, Politically Contrived or Real TBD

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

Unsurprisingly, the third-quarter GDP data released during the all-important 19th Party Congress confirmed that China is on track to achieve the stated annual growth target set by the government. Politics aside, however, the current growth momentum will likely carry forward into early 2018, as steady consumption growth and export recovery are both anticipated to last in the near term. However, some other factors also responsible for the acceleration in the run-up to the Congress are weakening, most importantly the tailwind of the housing market boom since late 2015. Over the short term, our concern is about the weak investment sentiment in the private sector. Over the longer term, we’re looking at the unrectified inefficiency in investment and production. Both are key drivers for productivity growth, which in turn determines economic sustainability and both income growth and corresponding consumption growth.