China’s Q3 economic growth beats market forecast, headwinds persist

Customers select tomatoes at a stall inside a morning market in Beijing, China Aug 9, 2023. REUTERS/Tingshu Wang/File photo

BEIJING  -China’s economy grew at a faster-than-expected clip in the third quarter, data showed on Wednesday, while domestic consumption also picked up pace last month, suggesting the recent recovery may carry enough steam to reach Beijing’s full-year growth target.

The world’s second-biggest economy has started to show signs of stabilizing thanks to a recent slew of policy measures, but a protracted property crisis, uncertainties over employment and household income and weak confidence among private firms pose risks to a durable revival.

Gross domestic product (GDP) grew 4.9 percent 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-percent increase but slower than the 6.3 percent expansion in the second quarter.

On a quarter-by-quarter basis, GDP grew 1.3 percent in the third quarter, accelerating from a revised 0.5 percent in the second quarter and above the forecast for growth of 1 percent.

The economy faltered in the second quarter after a brief post-COVID recovery, dragged by a property downturn and huge debt due to a decades-long infrastructure binge.

READ: China’s Q2 GDP growth slows to 0.8% q/q, raises stimulus expectations

Beijing has in recent weeks unveiled a raft of measures, including more public works spending, interest rate cuts, property easing and efforts to shore up the private sector.

The government has set a full year 2023 growth target of around 5 percent.

Industrial output in September grew a stronger than expected 4.5 percent from a year earlier, but the pace was unchanged from August, according to the data. Analysts had expected a 4.3-percent increase.

READ: China August industrial output, retail sales growth beat expectations

Growth of retail sales, a gauge of consumption, also beat expectations, rising 5.5 percent last month, and accelerating from a 4.6-percent increase in August. Analysts had expected retail sales to expand 4.9 percent.

Fixed asset investment grew 3.1 percent in the first nine months of 2023 from the same period a year earlier, versus expectations for a 3.2 percent rise. It expanded 3.2 percent in the January-August period.

Property investment in the first nine months of 2023 fell by 9.1 percent from a year earlier, after slumping 8.8 percent in January-August, the data showed.