China’s growth expected to miss official target in third quarter

BEIJING: China's economic growth is anticipated to miss its official target for the third quarter, as forecasters project a growth rate of 4.4%, slightly below the 4.5% goal for the year. This decline is attributed to a global energy shock, slowing domestic demand, and the dominance of exports, which have largely masked a persistent real estate crisis and a bleak consumer sentiment.

The world's second-largest economy has been following a different trajectory in recent years, with an export-driven AI boom overshadowing structural issues.

Beijing aims for an annual growth rate between 4.5% and 5%, the lowest target in decades. However, economists warn that China may fall short of this target, prompting the government to roll out mortgage subsidies for certain home purchases and support for infrastructure investment. The Chinese economy is also grappling with the surge in energy costs due to the US-Iran war, which has disrupted shipping from the oil-rich Gulf, making China the world's largest crude oil importer.

IMF officials recently lowered their growth projection for China this year to 4.5%, citing limited effectiveness of Beijing's recent support measures. Rebalancing the Chinese economy towards a more sustainable growth model, powered by domestic consumption instead of traditional drivers like construction, property development, and exports, remains a long-awaited task.

IMF Asia and Pacific department director Krishna Srinivasan emphasizes the need for this transformation, as exports continue to be the economy's only bright spot, with China's overseas shipments poised for another record trade surplus.