Growth momentum in China will unlikely turn any time soon

China's economy expanded by 6.9% y/y in Q3, down from 7.0% in the previous two quarters. This is the first time since Q1 2009 that China's quarterly GDP growth dropped below 7.0%. 

On a seasonally adjusted q/q basis, the economy grew 1.8% in Q3, unchanged from last quarter, suggesting that the growth momentum still remains soft. The data increase the risk that China will not achieve the growth target this year. 

Notably, this is the first time that China follows the IMF's Special Data Dissemination Standard (SDDS) to release its GDP figures. From now on, China will not only release headline GDP growth rate, but also publish underlying seasonally-adjusted quarterly GDP value on a constant price basis. 

China considers this to be an important step towards more transparency in its data, which would help dispel the scepticism over data manipulation. Obviously, this is a property-led slowdown. With housing investment slowing sharply since 2010, China's economic growth illustrates a downward trend as well. 

"Given the significance of the property sector which accounts for 12% of total investment and closely associates with many industrial sectors, China has suffered from the excessive dependence on one sector. Looking ahead, as housing oversupply remains an issue in lower-tier cities, growth momentum in China will unlikely turn any time soon", says Commerzbank.