Third Quarter China GDP Increases 6.7%

The economy in China grew at a steady rate of 6.7% during the third quarter. It appears the economy is ready to hit the target for a full year set by Beijing. It has been fueled through stronger spending by the government, record lending by banks and a property market that has become red hot.

The data released on Wednesday supplied a picture of a Chinese economy that is becoming stabilized slowly but is increasingly more dependent upon government spending as well as the housing boom for its growth, as investment from private sources and exports continue to be weak.

Some economists think Beijing must double down on its stimulus in 2016 to meet the official range of growth of between 6.5% and 7%.

They say the obsession of the government with meeting the difficult targets might hurt the planned reforms as well as long-term health of the second biggest economy in the world.

The economy expanded at the same rate during the third quarter as in the first two quarters year on year, which analysts were expecting.

Government projects in infrastructure and the boom in the property market have pushed prices and the demand for goods and raw material from steel to cement to furniture.

For the quarter, the economy grew at the rate of 1.8%, which was in line with economists’ expectations but eased slightly from the second quarter.

Worldwide economists believe the greatest risk short term for China is the possible correction in its property market that accounts for close to 15% of its GDP.

Investment in real estate accelerated during September and sales of homes surged, highlighting a persistent demand by investors even as more cities are tightening measures to help curb prices.

Investment growth in property increased to 7.8% during September based on a rate of one year and sales of property surged by 34%, though new starts in construction dropped by 19.3%, which suggested that sentiment amongst builders might have shifted as the government is looking to cool down the frenzy in buying.

A number of new restrictions that were imposed for buyers in big cities since the early part of October resulted in a big drop in sales.

Shanghai announced on Tuesday that it punished some of its property agencies for the falsification of contracts and launched new probes into certain developers suspected of increasing prices without obtaining authorization.