China's sluggish growth continues, indicating why Beijing has acted on the economy

China's economy continued to grow at a weaker pace in the summer, according to data released Friday, underscoring the urgency of the government's recent efforts to boost the economy.

A slowdown in the housing market has slowed construction. Millions of young college graduates have been unable to find work. Many local governments have run out of money to build roads or even pay teachers and other staff.

All of the Chinese economy depends on it, from apartments to cars to restaurant meals. Widespread declines in prices, a phenomenon called deflation, make it harder for companies and households to earn enough to pay their mortgages and other debts.

China's economy grew 0.9 percent from July to September compared with the previous three months, China's National Bureau of Statistics said. When projected for the full year, the economy grew at an annual rate of about 3.6 percent in the third quarter.

The increase partly reflected an official revision on Friday showing that the second quarter was weaker than previously acknowledged. Growth between April and July was at an annualized pace of 2 percent, and not the previously noted 2.8 percent pace.

Beijing announced a series of measures starting Sept. 24 to address the lingering problems that became apparent in the numbers released Friday. The central bank lowered interest rates and minimum down payments for mortgages. The finance ministry also pledged to sell more bonds to raise money for local governments to pay municipal salaries and buy vacant apartments for conversion into affordable housing.

“The timing of the stimulus shows that the government understands the deterioration of the economy,” said Louis Liu Qian, founder and chief executive of Usawa Advisory, a Beijing geopolitical and business consulting firm.

Investors initially reacted with a jitter to Friday's economic data announcement, but shares in China later rose after the central bank's governor unveiled details of a program to expand lending to buy stocks.

Shopkeepers complain of poor sales, even as they reduce prices so much that they make little or no profit.

“We have no business now,” said Yu Jingjun, a wallpaper dealer in Jibo, east-central China, as he sat idly in his empty shop on a recent weekday. “When real estate fails, everything else follows.”

After working in the home decor business for more than a decade, Mr. Yu has seen most of his sales evaporate in the past few years. “There was a time when not getting an order was unthinkable, but now, it's been years since I last got one,” he said.

But the statistics bureau announced on Friday that overall retail sales rose 3.2 percent in September from a year earlier, compared with just a 2.1 percent gain in August. One component of that data, sales of home appliances and electronics, rose 20.5 percent last month from a year earlier after the government sharply increased trade-in subsidies over the summer. Small rebates introduced last spring were dismissed by many shoppers as too little.

The slowdown in growth was less evident in the Chinese government's preferred figures: the change in the third quarter compared to the same period last year. By that measure the economy was 4.6 percent larger than a year earlier, down from 4.7 percent in the second quarter.

Falling prices are a growing problem for China not only at home, but in its foreign trade. Inflation began to hit what was China's only remaining economic strength this year: exports.

By September, the overall value of China's exports had risen just 2.4 percent from a year earlier, as steadily rising volumes of shipments were mostly offset by Chinese companies receiving less money for each load.

For the past four years, China has relied on rapidly expanding exports to offset difficulties in its domestic economy. From cars to chemicals to solar panels, the physical volume of China's exports continues to grow.

But the money China gets for each product is falling as Chinese companies cut prices to try to clear their warehouses of excess merchandise.

For example, the number of cars and trucks exported by China in the last three months has increased by 36 percent compared to a year ago. But their total value rose 29 percent, according to data from China's General Administration of Customs. That means the average price of each exported motor vehicle was falling.

Similarly, the number of flat-panel displays exported by China rose 12 percent in the past three months from a year earlier. But their total value quickly climbed in half.

The result is in some ways the worst possible outcome for China. The growing physical volume of the country's exports and growing market share in foreign markets have triggered reactions in many countries, prompting tariffs.

Chinese officials claim they are now ready to pursue the answer that many foreign and Chinese economists have been recommending for months: strengthen the domestic economy. Finance Minister Lan Foan said on Saturday that the agency would soon “launch a package of expansionary policy measures aimed at stabilizing growth, expanding domestic demand and reducing risks in the near future.”

Central to this work is stabilizing the construction sector and other real estate-related industries that accounted for a quarter of the economy before the property slump began three years ago. Real estate investment fell 10.1 percent in the third quarter from a year earlier, the National Bureau of Statistics said Friday.

The total square footage of buildings fell 66 percent in the first nine months of this year compared to the same period in 2019 before the pandemic. So-called construction start data are important because they indicate how much activity will occur over the next few years.

Shanghai saw more existing apartments change hands on October 13 than any day since September 2023, according to state media. But even in Shanghai, after three years of flat or falling prices, buyers are wary.

“The investment appeal is gone, and buying a house is now for practical needs,” said Cao Longquan, a Shanghai real estate agent. “While apartment viewings are up, buyers remain relatively cautious.”

Many analysts have warned that China's economic woes echo Japan's struggles with mounting debt and sluggish growth a generation ago. But some believe that the government's stimulus measures could make the outlook less likely to worsen.

“China is in a debt-inflation spiral, but Beijing's latest economic policy U-turn will go a long way to prevent China from repeating what Japan experienced in the 1990s,” said Diana Choileva, chief economist at Enodo Economics in London. The research firm focuses on China.

Lee Yu Contribute research.