GDP just misses the 5 percent target, but the real question is whether the country is caught in the dreaded middle-income trap.
No one can say they didn’t see it coming. But still, when the expected number gels into fact, it feels like a letdown.
China’s National Bureau of Statistics released Gross Domestic Product (GDP) figures for the third quarter on Friday and they were nothing to call home about.
Severe Environment
Overall, GDP for the first three quarters of the year was up 4.8 percent from a year earlier. The third quarter, in isolation, was up 4.6 from the same three-month period in 2023, while it only gained 0.9 percent from the second quarter.
Although the bureau was at pains to say that the economy was on a stable growth trend, it also mentioned that developments had been impaired by the «complicated and severe external environment» and «new problems of domestic economic development»
One More Quarter
In other words, this falls well below the State Council’s 2024 GDP target of roughly 5 percent in growth, with just one quarter to go.
But the external environment is highly unlikely to improve in that time, particularly with the ongoing war in Ukraine, and an Israeli-Gaza conflict that seems to expand by the day. The domestic one shows some signs of revival, with markets at least being reawakened, albeit with a good measure of volatility, by recent stimulus measures. Still, that has to be contrasted with the ongoing real estate crisis, which is going nowhere quickly anytime soon.
US Elections
Moreover, the entire world appears to be holding its collective breath ahead of the US presidential election in a way no one has seen for decades, or maybe longer – itself not a sign that is necessarily conducive to the innocence of secular economic and business activity.
The real question we should be asking, however, is another one. And that is whether China has reached the feared middle-income trap, something that finews.asia has previously commented on at length. That is a question that will only be revealed with the benefit of hindsight, and a big chunk of data, much as the bursting of Japan's economic bubble in the early 1990s was.
