President Xi Jinping has sought to steer China’s economy away from debt-fuelled property investment and towards high-tech manufacturing © AFP/Getty Images
Published October 18, 2023
Expansion of 4.9% beats forecasts and comes after Beijing has tried to stabilise the property and banking sectors
China’s gross domestic product grew 4.9 per cent year on year in the third quarter, beating market expectations as Beijing steps up support for the world’s second-biggest economy.
The economy expanded 1.3 per cent on a quarterly basis, China’s National Bureau of Statistics said, regaining some momentum after growth of just 0.5 per cent in the April-June period.
Economists polled by Reuters had expected third-quarter year-on-year growth of 4.5 per cent. Wednesday’s figure compares with year-on-year GDP growth of 4.5 per cent in the first three months of the year and 6.3 per cent in the second quarter.
The stronger year-on-year growth figures also reflect a comparison with a period of rolling lockdowns last year, before the end of Xi Jinping’s pandemic controls. Chinese officials struck a cautious tone. “We should be aware that the external environment is becoming more complex and grave while the domestic demand remains insufficient and the foundation for economic recovery and growth needs to be further consolidated,” the NBS said on Wednesday.
To push China towards its annual growth target of 5 per cent — already the lowest in decades — Beijing has in recent months tried to stabilise the property and banking sectors and shore up support for the country’s stock market and renminbi.
Sheng Laiyun, an NBS spokesperson, said China was on track to hit the 2023 target, with the economy continuing to improve into the fourth quarter.
But he added that the pandemic’s impact on the private sector had been “severe” and the government needed to boost support. Alicia García-Herrero, chief Asia-Pacific economist at Natixis, said the breadth of Beijing’s recent stabilisation measures showed it was responding to “cracks” emerging in the financial system.
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SOURCE: https://www.ft.com/content/a31fa9ed-fc5e-4a37-a80c-956b443ad38b
RELATED: China’s economy grew by 4.9% but its outlook is still gloomy
Published October 18, 2023
The world’s second-largest economy expanded by 4.9% year on year in the third quarter, beating analysts’ forecasts but showing signs of slowing down.
The Chinese economy showed a bigger-than-expected expansion in the period of July-September, suggesting that a recent set of measures that Beijing put in place to boost the GDP, has worked.
According to the National Bureau of Statistics of China, the GDP expanded by 4.9% in a yearly comparison, following the 6.3% annual growth rate of the previous quarter.
One of the main drives of the growth was the increase in retail sales, a good indicator of consumption. It grew 5.5% in September from a year earlier, beating expectations.
Industrial output, which measures activity in the manufacturing, mining and utilities sectors, kept rising at the same pace as previously, by 4.5% year on year in September.
Previously released data shows that exports (providing 20% of the economy) have declined by 6.2% year-on-year in September.
Meanwhile, the ailing property sector (real estate counts for about 30% of China’s GDP) sank deeper into crisis, grappling with pressures on debt repayments, home sales, and investment.
Experts are cautious – dark clouds are still on the horizon
A stimulus package from the Chinese government kept the economy afloat over the past months.
Beijing raised state spending on infrastructure, cut interest rates and eased curbs on home-buying to support growth, which has been struggling to shake off the damage caused by the COVID-19 pandemic.
Even though the latest data set suggests that China is on track with Beijing’s target of about 5% growth for 2023, economists say wider reforms are needed to address long-term problems that are stifling growth.
Stephen Innes, managing partner at SPI Asset Management, said that although the numbers beat expectations, China’s economy is “not out of the woods by any means.”
“This growth suggests a modest improvement in the Chinese economy. However, there are ongoing calls for increased policy support to maintain consistent growth, as there are concerns about the sustainability of the recovery,” Innes said in a note.
Oxford Economics’ China economist Louise Loo said that the third quarter data showed that a “stimulus-led cyclical pickup in China was underway”.
The question is how sustainable this growth can be.
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SOURCE: https://www.euronews.com/2023/10/18/chinas-economy-grew-by-49-but-its-outlook-is-still-gloomy
RELATED: China’s Q3 GDP growth, September activity show economic recovery gaining traction
Published October 18, 2023
BEIJING, China – China’s economy grew at a faster-than-expected clip in the third quarter, while consumption and industrial activity in September also surprised on the upside, suggesting the recent flurry of policy measures is helping to bolster a tentative recovery.
Rapidly weakening growth in the world’s second biggest economy since the second quarter prompted authorities to step up their support steps, with the batch of data on Wednesday, October 18, indicating the stimulus is starting to gain traction although a property crisis and other headwinds continue to pose risks to the outlook.
Gross domestic product (GDP) grew 4.9% in July-September from the year earlier, data released by the National Bureau of Statistics showed, versus analysts’ expectations in a Reuters poll for a 4.4% increase but slower than the 6.3% expansion in the second quarter.
On a quarter-by-quarter basis, GDP grew 1.3% in the third quarter, accelerating from a revised 0.5% in the second quarter and above the forecast for growth of 1%.
“It seems that all of that stimulus is finally beginning to take effect, with a broad beat from growth, retail sales, industrial production, and unemployment,” said Matt Simpson, senior market analyst at City Index in Brisbane.
The government is walking a tight rope as it tries to restore economic equilibrium, with policymakers having to navigate a domestic property crisis, high youth unemployment, depressed private sector confidence, a slowdown in global growth, and Sino-US tensions over trade, technology, and geopolitics.
Beijing has in recent weeks unveiled a raft of measures, but its ability to spur growth has been hamstrung by fears over debt risks and a fragile yuan, which has been hit hard this year due to widening yield differentials as global interest rates remain elevated, led by the Federal Reserve’s tightening campaign.
Asian stocks pared their losses after the better-than-expected China data, while the yuan and trade-dependent Australian and New Zealand dollars all bounced. The yuan hit a one-week high of 7.2905 per dollar.
On track for gov’t GDP target
The recovery momentum suggests the government’s full-year 2023 growth target of around 5% is likely to be achieved.
“The improvement in Q3 economic data makes it less likely for the government to launch stimulus in Q4, as the growth target of 5% is set to be achieved,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“The focus of the government and the market will shift to the growth outlook for next year. The key issue is what growth target the government will set and how much fiscal easing will take place.”
The statistics bureau said China would be able to hit the 2023 growth target if the fourth quarter growth tops 4.4%.
The rosier-than-expected data has prompted international banks to upgrade their 2023 growth outlook, with Nomura raising its forecast to 5.1% versus 4.8% previously and JPMorgan lifting its forecast to 5.2% from 5%.
