BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/43
The supply-and-demand structure of the Chinese economy continues to shift as economic reforms are implemented and living standards rise. China’s growth depends increasingly on domestic consumption. CNBS does not yet release a quarterly breakdown of GDP demand components, but it reports consumer demand in January-September was responsible for 58 % of GDP growth (up from 49 % a year earlier). Steady income gains also support rising consumption. Average per capita disposable income was up 8 % y-o-y in January-September. Even as the contribution of fixed investment declines relative to consumption in overall demand, China’s investment rate remains exceptionally high.
The evolution of economic structures is also seen in the output figures. Growth in manufacturing and construction was significantly lower than in services. Industrial output growth dipped below 6 % y-o-y in September and new housing starts measured by floorspace fell sharply from a year earlier. In contrast, retail sales, an indicator of services output, rose nearly 11 %, and online retail sales rose by 35 %.
The latest figures indicate a fairly steady situation in China, despite the turmoil in stock and currency markets in the third quarter. Economic growth continued its gradual slowdown and economic structures shifted. While China’s official unemployment data is poor, no information suggest any significant weakening in labour market conditions.
Growth in China’s GDP, industrial output and retail sales, %
Source: Macrobond