China’s economy picked up steam in the third quarter, growing by 4.9% over the same period last year, according to data released on Wednesday by the National Bureau of Statistics (NBS).
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That puts Beijing’s yearly growth objective within reach and was higher than the prediction of 4.4% growth from a Reuters poll of economists. The economy grew by 5.2% in the first nine months of 2023 compared to the same period last year.
Zhiwei Zhang, president and chief economist for Pinpoint Asset Management in Hong Kong, stated in a research note that “the growth target of [about] 5% is set to be achieved.”
The economy expanded by 1.3% on a quarterly basis from July to September. That was quicker than the 0.8% quarterly growth that was seen in the three months leading up to June.
According to NBS data, one of the strongest areas during the July to September period was consumer expenditure.
However, the crucial real estate industry continues to be a drag. According to NBS, real estate investment decreased 9.1% in the first nine months of 2023 compared to the same period in 2018.
After a government-led crackdown on developers’ borrowing, the real estate market, which has been responsible for up to 30% of the economy, entered a crisis more than two years ago. The slowdown is probably going to continue, which poses a serious danger to China’s prospects for growth over the ensuing three to five years.
After leaving behind three years of Covid restrictions, the second-largest economy in the world enjoyed a strong start to the year. However, the recovery stalled in the months of April to June due to sluggish consumer spending, a continuing real estate downturn, and subdued international demand for its manufactured goods.
Beijing has increased its attempts to boost the economy by lowering interest rates, eliminating limits on the purchase of homes and cars, speeding up infrastructure projects, and loosening capital controls to attract foreign investment.
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More Robust Consumer Spending
Additional NBS data that was made public on Wednesday indicated additional stabilization indicators.
Consumer spending is firmly in place. The strongest rate of growth in four months was seen in September when retail sales increased by 5.5%.
Prior to the prolonged Golden Week holiday, which lasted eight days and ended on October 6, spending on holiday-related goods and services increased last month.
The largest growth of all spending categories, tobacco and alcohol sales increased 23% in September from the same month last year. Catering services and sporting and entertainment goods came next, with growth rates of 12.8% and 10.7%, respectively.
In September, industrial output increased 4.5% from a year earlier, matching growth in August.
In the first nine months of the year, investment in fixed assets such as roads and airports increased by 3.1%. Investment fell by 0.6% in the private sector but increased by 7.2% in the public sector. Investment in infrastructure, in particular, increased.
Unexpectedly, unemployment decreased.
Urban unemployment decreased from 5.2% in August to 5% in September, a measure of joblessness in cities and towns. Since November 2021, it is the lowest level ever.
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However, no data were provided for youth unemployment, which peaked in June at 21.3% before the data release was halted.
The NBS will publish a formal study on house prices on Thursday.
According to Moody’s Analytics economist Harry Murphy Cruise, “the economic recovery is still in its infancy.”
Source: Cosmo Politian
