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President Xi hails China’s economic transition

China's annual economic growth rose from Rmb54 trillion to Rmb80 trillion, contributing more than one-third of total global economic growth, according to the country's President Xi. He hailed China's economic transition “from a phase of rapid growth to a stage of high-quality development” at the Communist Party's 19th annual Congress.

  • China's economy grew by 6.8% YoY during Q3, remaining above its “around 6.5%” target
  • Central bank policymakers in India disagreed over the path of monetary policy
  • Brazil's central bank cut its key Selic rate from 8.25% to 7.5%

“China's leaders continue to grapple with worryingly high levels of debt”

Over the past five years, China's annual economic growth rose from Rmb54 trillion to Rmb80 trillion, contributing more than one-third of total global economic growth, according to the country's President Xi Jinping . At the Communist Party's 19th annual Congress, President Xi said, “The new institutions of the open economy have been steadily improved. China now leads the world in trade, outbound investment, and foreign exchange reserves". He also hailed China's economic transition “from a phase of rapid growth to a stage of high-quality development” . Nevertheless, China's leaders continue to grapple with worryingly high levels of debt and the prospect of a bubble in real estate prices.

China's economic growth slowed slightly over the third quarter compared with the second. The country's economy expanded at an annualised rate of 6.8% during the third quarter, compared with growth of 6.9% in the second quarter. This growth remains above the Chinese government's official annual economic growth target of around 6.5% . During the month, the Shanghai Composite Index rose by 1.3%.

There was dissent amongst policymakers at India's central bank amid conflicting views over whether the country's economy requires fresh stimulus. Most of the members of the Reserve Bank of India's (RBI's) monetary policy committee voted in favour of leaving current monetary policy unchanged; however, while one member urged the RBI to stand ready to tighten its stance, another stated that August's cut of 0.25 percentage points was “too small and too late”. India's annualised rate of consumer price inflation remained unchanged at 3.28% during September, compared with the RBI's target rate of 4%. The CNX Nifty Index rose by 5.6% over October.

Brazil's central bank cut its key Selic rate from 8.25% to 7.5% during October, citing “indicators of economic activity… consistent with a gradual recovery of the Brazilian economy”. Although the cut represented the COPOM's ninth consecutive reduction, the 75 basis point cut was relatively small: the previous four reductions were consistently larger at one percentage point on each occasion.

Inflationary pressures have continued to ease in Brazil; the country's annualised rate of inflation was 2.54% in September, remaining considerably below the central bank's target rate of 4-5% (plus or minus 1.5 percentage points). In comparison, inflation was running in excess of 10% less than two years ago. The benchmark Bovespa Index ended the month broadly unchanged.

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