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Is China Showing a Structural Change?

PART:
1 2 3 4 5 6 7 8
Is China Showing a Structural Change? PART 1 OF 8

China’s GDP at 6.8% in 3Q17: What’s Affecting Economic Growth?

China’s GDP in 3Q17

China’s (FXI) (YINN) GDP grew at an annualized rate of 6.8% in the third quarter of 2017. It met the market expectation of 6.8%. The economy (MCHI) expanded at an annualized rate of 6.9% in the first two quarters of 2017.

China’s GDP at 6.8% in 3Q17: What&#8217;s Affecting Economic Growth?

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Components of GDP

Fixed-asset investments, the major component of China’s (ASHR) GDP, have grown at a much slower pace in the last 18 years. Private investment growth stood at 6.0% from January through September of 2017, which is lower than 6.4% from January through August of 2017. However, retail sales and industrial output both supported China’s GDP in 3Q17.

Industrial production rose 6.6% on a yearly basis as of September 2017 compared to a 6.0% rise in August. It beat the market expectation of 6.2%. On a yearly basis, retail sales improved to 10.3% in September compared to 10.1% in August 2017. It beat the market expectation of 10.2%.

The improvement in economic growth was mainly supported by the improvement in consumer spending in 3Q17. However, fixed asset investments posted weaker growth in the same quarter. Rising consumer spending seems to be improving investor confidence. However, ongoing political issues are slowly hampering consumer sentiment.

In the next part of this series, we’ll analyze the performance of China’s manufacturing PMI (Purchasing Managers’ Index) for September 2017.

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