China’s Economic Rebound: Q3 Growth Shatters Predictions
China's economy outperformed market expectations in Q3, posting a 4.9 percent year-on-year GDP growth.
This was a recovery from the sluggish 0.5 percent growth in the previous quarter. Economists polled by Reuters had predicted a 4.5 percent year-on-year growth, with comparisons to the first and second quarters at 4.5 percent and 6.3 percent, respectively.
Government officials are cautiously optimistic due to a complex global environment and domestic demand limitations. To reach the annual 5 percent growth target, Beijing has taken measures to stabilize property and banking sectors while strengthening the stock market and renminbi.
However, the pandemic’s impact on the private sector remains severe, necessitating additional government support. Experts warn that a 5 percent growth target may not be enough to address underlying financial system challenges.
Retail sales rose by 5.5 percent in September, falling short of expectations for double-digit growth. Fixed-asset investment increased by 3.1 percent in the first nine months, with a focus on high-tech manufacturing and self-sufficiency. Property investment fell by 9.1 percent due to debt defaults and weak apartment sales. New housing starts decreased by over 20 percent compared to the previous year.
China aims to shift toward sustainable growth, emphasizing consumer services and high-tech manufacturing. However, this has been complicated by the lackluster post-pandemic rebound and a slowing property sector that affects confidence.
Private sector investment saw a further 0.6 percent decline in September. Industrial production, historically a growth driver, increased by 4.5 percent year-on-year in September.
China’s export outlook remains uncertain, with global tensions and strained international relations affecting trade. Goldman Sachs analysts anticipate further policy measures due to persistent weaknesses, especially in the property market.
Following the data release, the CSI 300 index dropped by 0.7 percent. Marcella Chow of JPMorgan Asset Management suggests that continued policy support from Beijing will benefit sectors like advanced manufacturing and renewable energy.