China's economic performance in the third quarter of 2023 has surpassed market expectations, with a robust 4.9% growth year-on-year, according to data released by China's National Bureau of Statistics. This growth rate, which outpaces the anticipated 4.6% as per a Reuters poll, has ignited optimism that the world's second-largest economy is on track to achieve Beijing's annual target.
The third-quarter surge follows a 6.3% growth in the April-June period and a 4.5% increase in the January-March quarter. When analyzed on a quarter-to-quarter basis, the economy expanded by 1.3% in Q3, which is notably stronger than the predicted 0.9% growth. For context, the GDP in the second quarter had risen by 0.8% compared to the preceding quarter.
In addition to the GDP figures, China also unveiled its monthly data, which showcased a 4.5% growth in industrial production and a significant 5.5% spike in retail sales for September, year-on-year. Both these figures exceeded market predictions. Furthermore, the unemployment rate in September dropped to 5%, a decline from the 5.2% reported in August.
These positive economic indicators come at a time when China's post-Covid economic recovery has been described as "tortuous" by the nation's top leaders. Inflation metrics for September revealed that consumer prices remained flat, teetering on the brink of deflation. Meanwhile, the producer price index's annual declines decelerated for the third consecutive month. September's export figures dipped less than anticipated, although imports experienced a slightly more pronounced decline than expected.
Another key financial metric, aggregate financing, which provides a comprehensive measure of credit extension, rose by 9% in September, slightly above market forecasts. A steeper-than-expected drop in the value of new bank loans was counterbalanced by a robust government bond issuance and an expansion in shadow banking credit.
This economic upswing comes as a relief to Beijing, which has been grappling with a myriad of challenges, including regulatory crackdowns on various sectors, energy shortages, and global supply chain disruptions. The strong Q3 performance suggests that China's economic fundamentals remain resilient, even in the face of these headwinds.
However, while the numbers are promising, experts caution that the road ahead remains uncertain. Global economic conditions, the evolving pandemic situation, and internal challenges could still pose hurdles for China's economy in the coming quarters.
