China’s economy has rebounded at a faster-than-expected pace in the third quarter, according to official figures, but strict COVID-19 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 percent in the July-September quarter year-on-year, official data showed on Monday, above the 3.4 percent pace forecast in a Reuters news agency poll of analysts, and quickening from the 0.4 percent pace in the second quarter.
The data was originally scheduled for release on October 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.
“The Chinese economy has great resilience, potential and latitude,” Xi told reporters on Sunday as he unveiled the top leadership team of the Communist Party for the next five years.
“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 percent from a year earlier, beating expectations for a 4.5 percent gain and 4.2 percent 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 loyalists to Xi, heightening fears he will double down on ideology-driven policies at the cost of economic growth.
Despite the rebound, the economy faces challenges on multiple fronts at home and abroad. China’s zero-COVID strategy and strife in its crucial property sector have exacerbated the external pressure from the Ukraine crisis and a global slowdown due to interest rate hikes to curb red-hot inflation.
A Reuters poll has forecast China’s growth to slow to 3.2 percent in 2022, far below the official target of about 5.5 percent, marking one of the worst performances in almost half a century.
In signs of continued strain, exports grew 5.7 percent from a year earlier in September, beating expectations but coming in at the slowest pace since April.
Imports rose a feeble 0.3 percent, undershooting estimates for 1.0 percent growth.
Retail sales grew 2.5 percent, missing forecasts for a 3.3 percent increase and easing from August’s 5.4 percent pace, underlining still fragile domestic demand.
The surveyed urban jobless rate nudged up to 5.5 percent in September, the highest since June, with the unemployment rate for job seekers between the ages of 16 and 24 at 17.9 percent.
More crucially, month-on-month new home prices 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.
Policymakers had rolled out more than 50 economic support measures since late May, seeking to bolster the economy to ease job pressures, even though they have played down the importance of hitting the growth target, which was set in March.
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.”