This is the second quarter in a row that China’s official measure of economic growth has fallen below the 5% target, which will add to government concerns.
“The government’s growth target for this year now appears in serious jeopardy,” the former head of the International Monetary Fund’s (IMF) China division, Eswar Prasad told BBC News.
“It will take a substantial stimulus-fuelled boost to growth in the fourth quarter to hit the target.”
Official figures also showed new home prices in China fell in September at the fastest pace in almost a decade, indicating that the downturn in the property sector is worsening.
“The property market unsurprisingly remains the biggest drag on China’s growth,” said Lynn Song, chief economist for greater China at banking giant ING.
“New investment is unlikely to see a substantive recovery until prices stabilise and housing inventories decline… until then property will remain a notable headwind to growth.”