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 Chinese leaders have been trying to reassure global markets that
Beijing is able to manage the world's second-largest economy after a
shock devaluation of the yuan <CNY=CFXS> and a summer stock market
plunge fanned fears of a hard landing.
But even the government concedes the economy is entering a slower
growth phase after decades of breakneck expansion.
Growth in third-quarter gross domestic product (GDP) likely slowed
to 6.8 percent from the same period last year, down from 7 percent
in the second quarter, according to a Reuters poll of 50 economists.
That would be the weakest pace of expansion since the first quarter
of 2009, when it tumbled to 6.2 percent, but far from an alarming
loss of momentum.
The highest forecast in the poll was 7.2 percent and the lowest was
6.4 percent, though some investors fear current growth levels could
already be much weaker than the official data will suggest.
"We expect the government to maintain loose monetary policy and step
up fiscal spending in response to the economic slowdown," economists
at China International Capital Corp (CICC), a domestic investment
bank, said in a note.
"We believe that loosening measures may help cushion the slowing
momentum in economic growth but it's difficult to reverse the
long-term downward trend."
Instead of calming financial markets, a surprisingly resilient
reading on Monday could reinforce scepticism about the reliability
of Chinese official data. However, some economists believe
government statistics may actually be underestimating consumption
and strong service sector growth.
Despite weak exports and imports, industrial overcapacity and a
property downturn, annual economic growth in the first two quarters
was 7.0 percent, in line with Beijing's full-year target, with the
government rejecting suggestions that the figures were being
inflated to meet official forecasts.
Sheng Laiyun, spokesman for the National Bureau of Statistics, said
last month that third-quarter economic growth will be largely stable
as the impact from the stock market slump on the broader economy has
been limited.
The bureau has changed the way quarterly gross domestic product data
is calculated, a move it calls a step to adopt international
standards and improve the accuracy of Chinese numbers.
POLICY SUPPORT
China's policymakers think they can stem a rapid rundown of the
country's foreign exchange reserves and ease pressure on the
currency by pump-priming the economy to meet this year's growth
target, sources involved in policy discussions say.
The CICC expects the central bank to deliver another 25-basis point
(bps) cut in interest rates and two cuts in bank reserve ratios
totaling 100 bps by year-end.
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China's consumer inflation cooled more than expected in September
while producer prices extended their slide to a 43rd straight month,
highlighting the urgency for the central bank to tackle deflationary
pressures.
The central bank has already cut interest rates five times since
November, and reduced the amount of cash that banks must hold as
reserves to spur activity, though some analysts say such moves have
not been as effective as in the past when the economy was more
tightly controlled and debt levels were much lower.
Other support measures have included more government spending on
infrastructure and easing down payment requirements and other curbs
on the cooling property sector, which have succeeded in reviving
weak home sales and prices but have not yet reversed a sharp decline
in new construction which is weighing on demand for materials from
cement to steel.
MONTHLY DATA
A raft of monthly indicators will be released with the GDP
data, and analysts will be looking for signs as to whether momentum
is still fading or if the economy may be slowly stabilizing.
Factory output likely grew 6.0 percent in September from a year
earlier, slowing from August's 6.1 percent rise, as firms struggle
to cope with persistent deflationary pressures due to overcapacity
and softening demand.
Annual growth of fixed-asset investment, a crucial driver of China's
economy, likely eased to 10.8 percent in the first nine months of
2015 - the weakest expansion in nearly 15 years - from 10.9 percent
in January.
Annual retail sales growth was seen at 10.8 percent in September,
unchanged from August.
China's exports fell less than expected in September, with monthly
figures showing recovery, but a sharper fall in imports left
economists divided over whether the country's ailing trade sector is
showing signs of turning around.
(Additional reporting and polling by Shaloo Shrivastava in BENGALURU;
Editing by Kim Coghill)
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