China Economic Rebound Accelerates: In an unexpected turn of events, China’s economic engine upped its velocity in the third quarter, surprising earlier projections. In September, both consumption and industrial activity demonstrated surprise energy, suggesting that recent policy initiatives helped shore up a fledgling recovery.
According to figures provided by the National Bureau of Statistics, Gross Domestic Product (GDP) soared by 4.9% in July-September compared to the previous year. This beat the estimated 4.4% growth projected by analysts. However, the rise was considerably slower than the robust 6.3% expansion in the second quarter.
Drilling into quarterly dynamics, the third quarter showed a strong upswing, with GDP expanding by 1.3%. This increase, up from a revised 0.5% in the second quarter, outpaced the projected 1.0% rise. Senior market analyst Matt Simpson of City Index in Brisbane observed the palpable impact of the stimulus, witnessing a thorough upturn in growth, retail sales, industrial production, and unemployment.
China’s economic trajectory deteriorated in the second quarter following a temporary post-COVID recovery. This setback was aggravated by a downturn in the housing market and a load of huge debt accrued during a prolonged infrastructure splurge spanning decades.
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In response to this challenge, Beijing recently released a barrage of measures. These included heightened public works spending, decreases in interest rates, easing in the property sector, and attempts to prop up the private segment. The clear momentum in the third quarter shows that the government’s yearly growth objective of around 5.0% for 2023 is well within reach.
Chief Economist Zhiwei Zhang at Pinpoint Asset Management indicated that the stronger Q3 economic indicators lower the chances of government-initiated stimulus in Q4, as the 5% growth objective is ready to be met. Attention is expected to swing toward the economic projection for the succeeding year, with questions lingering about the government’s growth objective and the level of fiscal easing.
With a stronger-than-anticipated 4.5% increase over the prior year, September’s industrial output showed resiliency. But despite expectations for a 4.3% increase, this pace was identical to August’s. However, retail sales, a key indicator of consumption, outperformed forecasts by increasing by 5.5% in the most recent month after rising by 4.6% in August, defying the expected 4.9% growth.
Compared to the same nine-month period in 2022, fixed asset investment increased by 3.1%, which was less than the predicted 3.2% increase. Nevertheless, the data showed that property investment was in a downward trend, declining by 9.1% in the first nine months of 2023 compared to the prior year, following a decline of 8.8% from January to August.
Our Reader’s Queries
Has China’s economy rebound more than expected?
China’s economic recovery has been largely driven by a surge in consumer spending. In March, retail sales saw a year-on-year growth of 10.6%, the highest rate since July 2021. The services sector played a key role in this rebound, with catering sales experiencing a significant surge of 13.9% in the first quarter of the year. This trend is attributed to the pent-up demand for leisure activities and dining out, following the lifting of Covid-19 restrictions.
Why is China economy growing very fast?
The economy is largely driven by industrial production and manufacturing exports, but it lags behind other top 10 countries in terms of development. Government spending has played a crucial role in driving growth, resulting in haphazard construction in recent years.
Will China overtake the US?
Forecasting the future of the U.S. and Chinese economies is a challenging task. Unforeseen geopolitical events or technological advancements could significantly alter the landscape. While China may have an opportunity to surpass its primary competitor, current projections suggest that this outcome is improbable.
What is China doing to stimulate the economy?
China’s leaders emphasized the importance of high-quality development during a recent meeting, as seen in a CCTV readout. They outlined a nine-point plan that includes technological innovation in the industrial system, increasing domestic consumption, expanding high-level foreign investment, and revitalizing agriculture to improve food production. This plan aims to enhance the country’s economic growth and sustainability.