China's Economic Growth Slumps Amid Property Sector Crisis

China's economic growth slowed to 4.6% in the third quarter of 2024, marking the country's slowest expansion in a year and a half. This downturn has heightened pressure on the government to follow up on recent stimulus efforts with additional measures to boost the economy, especially amid ongoing challenges such as a debt crisis in the property sector and a complex external environment.

Authorities have been implementing various policies since last month to stimulate consumption and address the prolonged property sector woes. Despite early optimism for a large-scale "bazooka stimulus," the lack of a specific bailout figure or detailed plans has tempered market expectations.

One positive sign emerged in the form of better-than-expected retail sales growth in September, signaling some recovery in consumer activity. However, other economic indicators, such as inflation, investment, and trade, have fallen short of expectations.

In response, China's central bank, the People's Bank of China (PBoC), has introduced new liquidity measures. These include a swap facility for funds and insurers with an initial quota of 200 billion yuan (US$28.1 billion) to boost capital markets, as well as cutting interest rates on yuan deposits for the second time this year to encourage lending.

Looking ahead, PBoC Governor Pan Gongsheng suggested that more relief may be on the way, including a possible reduction in the reserve requirement ratio (RRR) for commercial banks, which could further enhance liquidity in the financial system. Economists, however, believe that more direct fiscal stimulus will be necessary to revive economic activity and restore business confidence in the world's second-largest economy.