A more granular look at China’s slowdown shows its stock market boom and increasing sophistication in financial services helped save the economy’s bacon last quarter.
Financial intermediation surged 15.9 percent from a year earlier, the standout performer among the nine industry groups including real estate, transport and farming outlined by the statistics bureau. Construction and ‘others’ were the only other two to beat the economy’s 7 percent expansion pace.
“The outsize contribution of the financial sector to growth underlines the dilemma facing Beijing as it attempts to tamp down a credit bubble without cratering growth,” said Bloomberg economist Tom Orlik. Booming brokerage fees, banks bringing off-balance sheet lending onto their books, and growth in a more sophisticated financial sector may be behind the surge, Orlik said.
Real estate slowed to 2 percent, deepening its drag on the economy, while farming, forestry and animal husbandry expanded just 3.2 percent from a year earlier. In a worrying sign for domestic demand and the rebalancing thesis, hotels and catering services rose just 5.3 percent.
While Premier Li Keqiang is seeking to spur services and consumption to take over from debt-fueled investment growth, a nation of stock speculators driving brokerage commissions probably isn’t what he has in mind.