China Economic Quarterly Q3 2018

Due to reform measures, the 6.5% growth rate of GDP in Q3 is slightly lower than Q2, and the overall growth trend is expected to be maintained in the future

The China Economic Quarterly is a market outlook prepared by PwC China and Hong Kong on a quarterly basis to share the latest economic and policy updates. This issue provides an overview of the macroeconomic trends in Q3 2018, policy insights about private enterprises receiving fair policy treatment as well as an in-depth analysis on the impact of China’s first import expo on its economy.

Major economic indicators

Here are some highlights of the Q3 updates:

  • Total GDP reached 65.09 trillion yuan by the third quarter.
  • Service sector accounted for 53.13% of the total GDP, and grew by an impressive rate of 7.7% year-on-year.
  • Total fixed asset investment reached 48.34 trillion yuan, expanding by 5.4% year-on-year in the first three quarters.
  • Investment in real estate development grew by 9.9% year-on-year to 8.87 trillion yuan during the first three quarters, while property market has shown signs of cooling down.
  • The growth of Industrial Added Values for companies over certain scales went up by 6.4% year-on-year in the first three quarters. A few sectors enjoyed growth of 10% to 13%, including electricity, special equipment, healthcare and pharmaceuticals.
  • Total retail sales of consumer goods went up by 9.3% in the first nine months year-on-year to 27.43 trillion yuan.
  • Amid the escalating trade dispute between China and the US, although the first round of tariffs was imposed in early July, China’s imports and exports have grown steadily in Q3.
  • The Producer Price Index (PPI) went up by an average of 4.0% year-on-year in the first nine months, which is 2.5% lower than the same period in 2017. 

China’s quarterly policy updates

Private enterprises to receive fair policy treatment

Some of the Chinese private companies are facing challenges given the slowdown of the economy. At a symposium on private enterprises at the Great Hall of the People in Beijing on Nov 1 2018, President Xi Jinping and other top leaders reiterated their unswerving support for the development of private enterprises. Some policies, amongst others, were announced as follows: The burden of taxes and fees on the companies should be eased; Measures should be taken to address the difficulty and high cost of financing for private firms; Policy implementation should be improved (this means no unfair treatment towards private companies when implementing government policies and measures); Entrepreneurs’ personal and property safety should be ensured.

China has made a significant improvement in the business climate and the government is still striving to advance it.

According to the World Bank’s annual report Doing Business 2019: Training for Reform, "China advanced to a global ranking of 46 this year, up from 78 last year, as the country implemented the largest number of reforms." More specifically, China ranks:

  • 6th for enforcing contracts
  • 14th for getting electricity
  • 28th for starting a business
  • 27th for registering property
  • 64th for protecting minority investors
  • 65th for trading across borders
  • 114th for paying taxes
  • 121st for getting construction permits

Hot topic analysis

The China International Import Expo (CIIE) was held in Shanghai on 5 November. This event celebrates the 40th anniversary of China’s reform and opening up, where China actively opens its market to the world. President Xi Jinping said during the opening ceremony of the import expo, that China's imported goods and services are estimated to exceed US $30 trillion and US $10 trillion respectively in the next 15 years.

What is the impact of China’s first import expo on its economy?

As China’s economy is entering into a new phase characterised by domestic demand and consumption-driven model, the growth of imports bodes well for mitigating the principal contradiction facing Chinese society in the new era, which is between the “unbalanced and inadequate development and the people's ever-growing needs for a better life”. Besides, increasing imports are also beneficial for the long-term stable growth of China’s economy.

According to China International Import Expo Bureau, during the event which lasted six days, deals valued about US $57.83 billion were signed for the year ahead. More specifically, the deals signed included:

  • US $16.46 billion of intelligent and high-end equipment
  • US $12.68 billion of food and agricultural products
  • US $11.99 billion of automobiles
  • US $5.76 billion of medical devices and medical goods
  • US $4.33 billion of consumer electronics and home appliances
  • US $3.37 billion of clothing and consumer goods
  • US $3.24 billion of services

Contact us

Thomas Leung

Mainland China and Hong Kong Managing Partner - Markets, PwC China

Tel: +[86] (10) 6533 2838 / +[852] 2289 8288

Elton Huang

Managing Partner, Central China Markets Leader, Shanghai Office Lead Partner, Entrepreneurial and Private Business Co-Leader, PwC China

Tel: +[86] (21) 2323 3029

Elton Yeung

Vice Chairman, Strategy and Innovation Leader, PwC China

Tel: +[86] (10) 6533 8008

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