China Q3 GDP Rises 3.9%, Above Estimates

By IndraStra Global News Team

Cover Image Attribute: Shanghai Skyline, Image by 756crystal from Pixabay

China, the world's second-largest economy's GDP, rose 3.9% year-on-year in the July-September quarter, above the 3.4% pace forecast in a Reuters poll of analysts and up from 0.4% in the second quarter. In the third quarter, China's economy rebounded faster than expected, but COVID-19, a worsening property crisis, and global recession risk complicating Beijing's efforts to boost growth next year.

The data was initially scheduled for release on October 18, it was delayed until after the 20th Communist Party Congress last week, where Xi Jinping secured a record-breaking third term and established a loyalist-dominated government.

Despite the recent improvement, the economy is still being hindered on numerous fronts, domestically and internationally. A global recession resulting from interest rate hikes to limit red-hot inflation has been compounded by China's zero-COVID plan and unrest in its primary property industry. This has added to the external pressure that the crisis in Ukraine has brought on.

Even while policymakers have downplayed the significance of meeting the growth target established in March, they have implemented over fifty different economic support measures, a.k.a. reforms, since the end of May to strengthen the economy and alleviate strains on the employment market. Suppose recently stated reforms such as raising the pension age and eliminating city residency rules are continued. In that case, Bloomberg Economics projects that China's economy will grow at an average rate of approximately 4.6% per year over the next decade.

As a result of the efforts made by the People's Bank of China (PBOC) to stimulate the economy, new bank lending in China virtually doubled in September compared to the previous month and was considerably above expectations.

Separate data indicated that industrial production increased by 6.3% year-over-year in September, which was significantly higher than the 4.5% growth that was anticipated and the 4.2% increase seen in August. However, retail sales struggled, increasing by only 2.5% against forecasts calling for a 3.3% increase following August's 5.4% expansion.

During the Party Congress, President Xi Jinping advocated for a policy known as "dual circulation," which aims to protect China's economy from the effects of economic shocks and sanctions imposed by the United States while also preserving China's essential trade and investment linkages with the rest of the world. During his remarks to the press, Xi underlined the latter portion of this strategy, adding that the country's economic opening "will only be wider."  Also, Xi highlighted that the party's "top priority" is economic development; however, he said that this aim must be balanced with national security. In addition, he stated that the goal for the next five years would be to reduce inequality while also concentrating on developing strategic technologies.

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