Risky?business [By Jiao Haiyang/China.org.cn]

Statistics issued by the National Bureau of Statistics (NBS) last Thursday show that China's gross domestic product (GDP) has grown by 7.4% over the third quarter. This, along with the previously released and better than expected data on the purchase management index (PMI), foreign trade, M2 money supply and consumer price index (CPI), indicates that China's economic growth rate may have bottomed out and a rebound may be on the cards for the fourth quarter.

Although the GDP growth rate during the third quarter has been the lowest in three and a half years, it is still in line with the target of the macro control. Driven by the warming real estate market, the steadily growing export orders, recovering consumption activities and improving environments of the European and U.S. markets, China's economic growth is expected to show an upward trend during the fourth quarter.

However，against the backdrop of industrial and economic reconstruction, the housing market's redirection towards consumption property and a sluggish global economic demand, the Chinese economy may not experience a V-shaped rebound. It may keep a stable growth rate, at 7%-8%, instead.

The current issues regarding China's economic growth are mainly about the redirection of the housing market property and the shift of the growth mode. The rapid growth of the last decade was mostly driven by the fast growing demand from the overseas market as well as the over-investment and speculation on the domestic market.

The latest round of declining economic growth started last year and was partly caused by the waning demand from overseas markets. But the main reason is the industrial reconstruction after the real estate market had started to bubble. And its reconstruction remains a work in progress. Therefore, the risk of recession caused by the overload of bubbles on the housing market cannot be underestimated even though there are again some positive signs for economic growth out there. If the huge bubbles on the housing market burst before being pricked by the regulators, China will risk its chances at regaining economic growth. Although its economy can get back on the upward track, the growth rate will be different from previous figures.

The author is a researcher with the Institute of Finance and Banking of the Chinese Academy of Social Sciences.

This post was first published in Chinese and translated by Li Shen.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.