China’s economy rebounded at a faster-than-expected pace in the third quarter, but strict COVID curbs, a deepening property crisis and global recession risks are challenging Beijing’s efforts to foster a robust revival over the next year.
Gross domestic product (GDP) in the world’s second-biggest economy rose 3.9% in the July-September quarter year-on-year, official data showed on Monday, above the 3.4% pace forecast in a Reuters poll of analysts, and quickening from the 0.4% pace in the second quarter.
The data was originally scheduled for release on Oct. 18 but was delayed amid a key Communist Party Congress last week, which ended with Xi Jinping securing a precedent-breaking third term as its leader.
“Its strong fundamentals will not change, and it will remain on a positive trajectory over the long run.”
The economy was buoyed by the manufacturing sector, with separate data showing industrial output in September rose 6.3% from a year earlier, beating expectations for a 4.5% gain and 4.2% in August.
Chinese stocks tumbled on Monday and the yuan weakened as investors focused on the country’s new governing body membership, which was stacked with loyalist to Xi, heightening fears he will double down on ideology-driven policies at the cost of economic growth.
A Reuters poll forecast China’s growth to slow to 3.2% in 2022, far below the official target of around 5.5%, marking one of the worst performances in almost half a century.
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The surveyed urban jobless rate nudged up to 5.5% in September, the highest since June, with the unemployment rate for job seekers between the ages of 16 and 24 at 17.9%.
More crucially, month-on-month fell for the second straight month in September, reflecting the continued homebuyer aversion in the economically vital sector as indebted developers raced to pool resources and deliver projects on time.
New bank lending in China nearly doubled in September from the previous month and far exceeded expectations, thanks to central bank efforts to revive the economy.
“On the policy front, the overall policy will remain supportive,” said Hao Zhou, chief economist at Guotai Junan International.
“In our view, further policy impetus is required to buoy economic recovery, but additional interest rate cuts are unlikely during a period of aggressive global central bank rate hikes.”
