Despite a series of monetary easing and fiscal stimulus measures implemented by the Chinese Communist Party, a recent expert survey by Reuters shows that China’s economic growth this year may only reach 4.8%, falling below the 5% growth target. The growth rate for 2025 is projected to further slow down to 4.5%.
It is worth noting that all surveys were conducted against the backdrop of the PBOC’s loosening monetary policy on September 24 and expectations of large-scale fiscal stimulus measures. This highlights the deep pessimism from external sources about the impact of the real estate crisis on China’s economic growth.
According to Reuters, the survey was conducted from September 27 to October 15. Of the 75 economists surveyed in July and October, the majority (57%) lowered their growth forecasts for this year, while 32% of economists maintained their predictions.
During a press conference held by the Ministry of Finance on October 12, Deputy Minister Wang Dongwei stated that in the fourth quarter, they plan to expand the scope of special bond usage to “support the construction of major projects in economically strong provinces,” promote the continued construction and completion of ongoing projects, and implement major national strategic projects on the ground. By the end of September, local governments had issued new special bonds totaling 3.6 trillion yuan.
It is evident that the CCP aims to boost GDP growth for the whole year through the relaxation of special bonds and investment in “major projects” in economically strong provinces.
Reuters quoted Xing Zhaopeng, senior China strategist at ANZ Bank, saying, “The main pressure on the (Chinese economy) comes from the consumption side, which is related to the deflationary pressure.”
According to Bloomberg, the damage caused by the real estate market to the Chinese economy may not be resolved by the aforementioned targeted investment approach by the CCP.
Bloomberg reported last month that the decline in the Chinese real estate market is likely to continue for several years, leading to a reduction in household wealth amounting to nearly $18 trillion. This is the biggest challenge facing the Chinese economy. The decline in the Chinese real estate industry has affected approximately two hundred related industries.
Eight experts participating in Bloomberg’s survey predicted that the real estate market downturn in China could last another two to five years.
China’s GDP growth rate was 5.3% in the first quarter of this year, 4.7% in the second quarter, and is widely believed to be lower in the third quarter than in the second. The Reuters survey indicates that GDP growth is around 4.5%, hitting the lowest level since the first quarter of 2023.
Furthermore, the survey also suggests that consumer prices in China are expected to rise by 0.5% this year, far below the government’s target of around 3%, and are projected to increase by 1.4% by 2025.
The last time China failed to achieve its growth target was in 2022 when the economic growth rate was only 3% due to the widespread epidemic, significantly lower than the target of around 5.5%.
An article by Voice of America points out that it is rare for Chinese decision-makers to miss their economic growth targets. Therefore, many doubt China’s economic data and even suggest that the key to whether China can achieve its growth targets lies in the “statistical bureau.”