For the first time in 15 years China looks likely to miss its GDP growth target for 2014.
GDP grew by 7.3 percent in the third quarter, the lowest rate since the start of 2008.
Although factory output was up and the labour market remains stable, the property market continued to slow down, and consumers are still not buying enough. Analysts are starting to wonder if China will step in, say, by cutting interest rates.
“If you look at unsold housing in the first, second and third tiers they remain quite high. Average sales volumes fell by 20 to 30 percent, so we would think that with this property curb policy easing, we may see some small boost for the property market,” said Li Gang-Liu, Chief Economist for Greater China with the Australia and New Zealand Banking Group.
Observers admit to some confusion as to what is going on, as there are conflicting signals. While credit is growing at its slowest rate since 2002 investment suffers, too. This year’s 7.5 percent GDP growth target now appears unrealistic.
Inflation hit a five-year low as domestic demand slackened, but factory output was up 8.o percent in September.