China just triggered more stimulus measures, even as it says its economy is showing ‘stable growth’

• China’s GDP grew 4.6% in the third quarter — its slowest pace of growth in six quarters.
• The People’s Bank of China triggered two market support programs after China announced economic data.
• China is targeting GDP growth of around 5% this year.

China on Friday released third-quarter growth data that was its slowest in six quarters, but its stock markets still ended higher on a shot of confidence from its central bank.

China’s economy grew 4.6% in the third quarter of this year, the country’s statistics bureau announced as it touted a “stable growth trend.” This was higher than the 4.5% growth forecast that economists polled by Reuters had expected but lower than the 4.7% recorded in the second quarter of the year.

Sheng Laiyun, the deputy head of China’s statistics bureau, told reporters the bureau is confident of hitting the country’s official GDP growth target for the year of around 5% based on the trend of economic stabilization and recovery seen in September.

China’s third-quarter GDP brings growth in the world’s second-largest economy to 4.8% through the first three quarters of this year. That puts it at “striking distance” to hit its full-year growth target, wrote Lynn Song, the chief economist for Greater China at ING.

September’s retail sales figures were also promising, as they rose 3.2% from a year ago to a four-month high. It was also higher than the 2.5% growth economists polled by Reuters had expected.

Meanwhile, industrial production in September grew 5.4% from a year ago — higher than the 4.5% economists had forecast.

Even so, some analysts are not convinced the economic data release signals a convincing recovery.

“We would downplay the importance of better-than-expected key economic indicators in September given that the structural weakness in the property and household sectors remains largely unaddressed,” wrote Betty Wang, the lead economist at Oxford Economics, in a note on Friday.

In September, China’s new home prices fell 5.8% from a year ago — the fastest pace since May 2015, according to Reuters calculations based on official data.

“The property market unsurprisingly remains the biggest drag on China’s growth,” wrote Song, adding that stabilization in the real estate market remains “elusive.”

The People’s Bank of China to the rescue

Also on Friday, markets got a shot in the arm as the People’s Bank of China pulled the trigger on two funding programs that stand to inject as much as 800 billion Chinese yuan, or $112.6 billion, into its stock market.

These programs — a share buyback and a swap facility — were first announced in late September in a package of measures to support the stock market.

PBOC’s governor also signaled more interest rate cuts at a financial forum on Friday.

The central bank’s announcements on Friday boosted market sentiment, sending China’s benchmark CSI300 to close 3.6% higher. Hong Kong’s Hang Seng Index also closed 3.6% up.

“The market is in a bad-news-is-good-news mode, as weak data implies more stimulus ahead,” Larry Hu, the head of China economics at Macquarie Group, wrote.

China’s economy is being dragged by factors including a property crisis, high youth unemployment, and deflation. Especially concerning is depressed consumer sentiment as people prefer saving over spending in the current downturn.

China has made frequent mentions of support and stimulus measures in recent weeks in an attempt to shore up flagging sentiment after years of negative news and after a massive rally last month ran out of steam.

“I think they are really trying to underpin growth,” Rajiv Biswas, an international economist who’s also the author of “Asian Megatrends,” told Business Insider.

He added that he expects Beijing to continue to do more to support growth so the economy can enter 2025 on better footing.

“We expect the policy coordination between monetary and fiscal policy will be stepped up in the following quarters. This should cushion the downside risks in the economy,” wrote Oxford Economics’ Wang.