{"id":1340,"date":"2024-09-14T15:00:03","date_gmt":"2024-09-14T15:00:03","guid":{"rendered":"https:\/\/friscotimes.org\/?p=1340"},"modified":"2024-09-15T02:14:09","modified_gmt":"2024-09-15T02:14:09","slug":"china-economy-needs-bazooka-stimulus-to-hit-growth-target","status":"publish","type":"post","link":"https:\/\/friscotimes.org\/?p=1340","title":{"rendered":"China economy needs ‘bazooka stimulus’ to hit growth target"},"content":{"rendered":"\n

China\u2019s economy lost momentum in August as activity cooled across the board, pointing to mounting risks to achieving the government\u2019s annual growth target.<\/p>\n

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Measures of factory output, consumption and investment all slowed more than economists had forecast, while jobless rate unexpectedly rose to a six-month high, official figures showed Saturday.\u00a0<\/p>\n

The broad weakening darkened the growth outlook for the world\u2019s second-largest economy, fueling calls for a more aggressive policy response with just a few months left before the end of the year.<\/p>\n

\u201cThe August data basically rules out the chance to attain the official target of 5% growth in 2024, unless the top leadership is willing to launch a bazooka stimulus package,\u201d said Raymond Yeung, chief economist for greater China at Australia & New Zealand Banking Group Ltd.<\/p>\n

Home prices fell at the fastest pace since 2014, reflecting weak confidence that\u2019s weighing on demand and threatening to draw China into a deflationary spiral. A string of rate cuts has done little to stimulate\u00a0borrowing<\/a>, indicating anemic consumer and business sentiment.<\/p>\n

The data adds up to a gloomy picture that gives authorities reason to take more forceful steps to put growth back on track before it\u2019s too late.<\/p>\n

\u201cAs we are already toward the tail-end of the third quarter, time is running low for policymakers to introduce measures to buoy the economy amid numerous headwinds,\u201d Lynn Song, chief economist for Greater China at ING Bank NV, wrote in a note.<\/p>\n

Even before Saturday\u2019s release, a vast majority of global banks including JPMorgan Chase & Co. already expected China\u2019s GDP to grow at the lower end of Beijing\u2019s goal target. Economists have called for authorities to do more to avert falling into stagnation akin to Japan\u2019s \u201clost decades.\u201d<\/p>\n

The downbeat data may just drive home their point, showing even the more resilient part of the Chinese economy is losing traction.<\/p>\n

Industrial output expanded at a slower rate than economists had expected, extending a weakening streak to the fourth month, the longest stretch since September 2021.<\/p>\n

That suggests the main driver of the Chinese economy this year \u2014 bolstered by exports and government support \u2014 is losing steam. More challenges may yet arise as trade tensions intensify over complaints about Chinese overcapacity by the US and other major partners.<\/p>\n

\u201cIf external demand can stay resilient for a little longer we could see some resilience, but given incoming tariffs and slowing global momentum we are erring on the side of caution,\u201d ING\u2019s Song said.<\/p>\n

Song also warned the auto sector may \u201cmove from a tailwind to a headwind\u201d given that the volume of car output fell 2.3% in August compared to the same period last year.<\/p>\n

While state capital-driven investment has been slowing, the deterioration in the private sector was even worse. Private investment fell 0.2% on year in the January-August period, registering its first decline this year, data showed.<\/p>\n

The National Bureau of Statistics acknowledged the challenging external environment and insufficient demand at home in a press conference after the release. Its spokesperson Liu Aihua also cited fresh college graduates as a reason for the uptick in the urban unemployment rate in August.<\/p>\n

The People\u2019s Bank of China on Friday\u00a0indicated<\/a>\u00a0it will step up its fight against deflation and prepare additional policies to revive the economy, in a rare statement accompanying the release of credit data.<\/p>\n

The day before, President Xi Jinping\u00a0urged<\/a>\u00a0government officials to \u201cconscientiously implement\u201d existing economic policies in the rest of the year to achieve full-year economic and social development goals.<\/p>\n

The output data so far in the third quarter suggests gross domestic product will expand at 4.6%-4.7% for the period, said Jacqueline Rong, chief China economist at BNP Paribas SA. That\u2019d indicate economic growth may struggle to pick up from the last quarter, which was the slowest since March 2023.<\/p>\n

She said the slowdown in activity will probably prompt the government to take some more supportive measures, but she expects no aggressive steps until policymakers meet at the Central Economic Work Conference in December.<\/p>\n

Highlights of China\u2019s economic activity data:<\/strong><\/p>\n