China’s GDP growth ‘suggests quite significant smoothing of the data’: analysts

China’s gross domestic product continued to grow at a steady rate of 6.7% for the third straight quarter. Government infrastructure projects and a booming property market spurred prices and demand for raw materials and goods, from cement and steel to furniture, reports Reuters.

The third straight quarter of identical growth, which falls in the middle of the government’s official growth target of 6.5%-7%, has some analysts wondering if the numbers are being white-washed, but even third-party estimates indicate that the world’s second-largest economy is growing at an impressive rate.

China GDP Growth rate

“It’s definitely unusual in an international context,” noted Julian Evans-Pritchard, a China economist at Capital Economics told CNBC. “There are almost no countries that have such stable GDP growth rates. It suggest quite significant smoothing of the data behind the scenes. Even by Chinese standards, this is quite rare.”

The economist noted that the economic slowdown early in the year likely isn’t reflected in the official numbers.

“There’s incentive for the statistics bureau to take advantage of [the underlying recovery] to bring the official figures closer in line with reality,” he said. “It’s a question of reversing the previous distortions.”

China reported that consumption contributed 71% of GDP growth in the first three quarters of the year, compared with 66.4% for 2015. The increase is partially due to contracting net exports, but also indicates some success in Beijing’s attempts to rebalance the economy from an over-reliance on investment-led growth, reported Reuters.

Data for September showed industrial output growth slowed to 6.1% versus expectations of 6.4%. Fixed-asset investment rose 8.2% in the first three quarters of the year as the government increased infrastructure spending. Fiscal spending in the first nine months of the year reached 12.5%.

Private investment growth picked up. It reached 4.5% after falling to record lows in recent months, but it still lags behind the investments made by state-owned firms.

“The official GDP figures remain too stable to tell us much about the performance of China’s economy. Our own measure of economic activity suggests that growth actually picked up last quarter, though the improvement clearly won’t last,” Julian Evans-Pritchard, China economist at Capital Economics in Singapore wrote in a note.

Capital Economics’ calculations suggest the economy is growing at around 5 percent, rather than China’s reported 6.7%.

A potential housing bubble concerns some

15% of GDP growth came from China’s property market, which has some economists concerned that the country may face a bursting housing market bubble. Property investment growth increased to 7.8% year-over-year in September while property sales spiked 34%, highlighting investor demand and more cities tightening measures to curb prices.

A wave of restrictions imposed on buyers in major cities since early October has resulted in a sharp drop in sales and authorities are stepping up pressure on speculators.

Shanghai said on Tuesday it had punished some property agencies for falsifying contracts and had launched probes into some developers suspected of raising prices without authorization.

Many economists believe that the steady influx of people into cities will continue to support the housing market, but others are concerned that there may be a repeat of the market crash from earlier this year following government intervention in the Chinese market.

The Bank for International Settlements also warned that a banking crisis may arise in the next three years as debt ballooned to 250% of GDP. Bureau of Statistics Spokesman Sheng Laiyun said “the impact (of property adjustment measures) on the economy will not be very big” in the short-term, however.

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