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22 Oct 2014

International Economy

China’s 3Q14 GDP Hit 5-Year Low despite Thriving E-Commerce (Current Issue No. 2550 Full Ed.)

The Chinese economy grew 7.3 percent YoY during 3Q14, declining slightly from the 7.4 percent growth reported for 1H14, representing the lowest QoQ growth in five-and-a-half years. During the first three quarters, China posted an average GDP growth of 7.4 percent YoY, supported by its service and export sectors. However, a slight decline was seen in domestic consumption, while investment dropped quite substantially. Looking thoroughly into China's economic developments over the years, it was found that the service sector share of its GDP has been growing steadily. During 3Q14, it grew 7.9 percent YoY, constituting 46.7 percent of the GDP. With the exception of the property and construction sectors, other sectors expanded at almost the same rates as during 2012-2013, suggesting that their outlook is bright.
We at KResearch are of the view that the Chinese economy may grow perhaps 7.4 percent YoY during 4Q14, driven by 1) the government's mini-stimulus package; 2) an eased monetary policy stance intended to support its business sector; 3) relaxed regulations toward property purchases that will help boost related businesses; and, 4) export growth to major markets. Thus, its full-year economic growth may come in at about 7.4 percent.
Amid this slowing Chinese economy as a result of the government's reform agenda, Thai businesses in China are urged to focus on the consumer market there in line with changes in China's economic focus, e.g., its attempts to promote the service sector as a growth engine.

One effective way to access the Chinese consumer market might be through e-commerce, given its impressive growth over recent years. During the first three quarters, turnover within the Chinese online retail market reached CNY1.8 trillion, up 49.9 percent YoY, because this channel met the needs of consumers seeking products and services online. Because such consumers are largely middle-class and their purchasing power is expected to rise in the future, this channel should help Thai businesses penetrate the Chinese market at lower costs. It also offers an opportunity for Thai businesses to conduct tests and promote various products, particularly consumer products that appeal to current urban lifestyles there, e.g., organic foods, cosmetics and others that are in high demand like communications devices, construction materials and home décor products.

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International Economy