China's economy holds steady, but consumers more cautious

Strong exports and continued investment in new factories offset faltering retail sales and a further erosion of China's housing market as growth in the Chinese economy held steady over the summer.

- KEITH BRADSHER

During the third quarter of the year, from July through September, China's economy expanded 1.1% over the previous quarter, maintaining roughly the same pace as during the spring, China's National Bureau of Statistics said in a statement yesterday. If that pace continues, the economy will expand about 4.1% over the next 12 months.

Over the past four years, a plunging housing market has erased much of the savings of Chinese households, causing many to curtail spending and hurting retail sales. The central government has tried to offset this by providing subsidies for consumers to buy smartphones, electric cars, appliances and other goods that are made mainly China. But some local governments, which bear part of the cost of the subsidies, are trimming their spending on these programmes.

Apartment prices are down by as much as 40% in many cities from their peak in the summer of 2021, dealing a crippling blow to the country's developers and builders. The contraction in real estate and construction, which used to represent a quarter of China's economy, continued during the third quarter.

Retail sales of consumer goods are still weakening. They were up only 3% in September from the same month last year, according to data released yesterday. That was the smallest increase since November last year, when the increase was also 3%.

Investment in new factories offset some of this weakness until this past summer. The government has recently become concerned about manufacturing overcapacity, price wars and other signs of excessive competition.