China’s economy grew 4.6% year-on-year in the third quarter, slightly exceeding the 4.5% forecasted by economists polled by Reuters.
However, the growth was marginally lower than the 4.7% increase recorded in the second quarter, reflecting ongoing challenges in the world’s second-largest economy.
On a quarter-to-quarter basis, China’s GDP expanded by 0.9% in Q3, up from 0.7% in the previous quarter.
Positive signs despite economic uncertainty
Sheng Laiyun, deputy commissioner of the National Bureau of Statistics, expressed optimism, stating that the national economy “showed positive signs of growth” in September.
Other economic indicators, such as retail sales and industrial production, also exceeded expectations, signaling that China may be on a path to recovery after recent economic struggles.
Beijing has been under mounting pressure to meet its annual growth target of “around 5%.” According to Tianchen Xu, a senior economist at The Economist Intelligence Unit,
Since real GDP expanded by 4.8% in the first three quarters, the full-year target of 5% is now achievable with extra stimulus in Q4.
Stimulus measures and property sector challenges
Chinese officials have introduced multiple stimulus measures over the past few months to revive economic growth.
In September, the central bank reduced the reserve requirement ratio by 50 basis points, allowing banks to lend more and inject liquidity into the economy. However, low consumer confidence and a struggling property market continue to weigh on growth.
Over the weekend, Minister of Finance Lan Fo’an stated that the central government has room to increase debt and expand the fiscal deficit, though no specific details on the size of the package were provided.
In a recent move, the Ministry of Housing announced an expansion of its “whitelist” program, aimed at supporting unfinished real estate projects.
The ministry intends to accelerate bank lending to these developments, with the goal of reaching 4 trillion yuan ($561.8 billion) by the end of the year.
Experts remain cautiously optimistic
Despite China’s ongoing economic challenges, Xu emphasized that the economy remains resilient:
China’s economy is not incurable, as some may suggest. The government’s commitment to shore up growth offers reason for optimism.
Analysts believe that with a coordinated stimulus push in Q4, China is well-positioned to meet its annual growth target and stabilize its economic outlook.
However, structural issues, such as weak consumer demand and the need for further property market reforms, could present obstacles in the coming months.
Economists warn that Beijing must continue to balance stimulus measures while avoiding excessive debt accumulation, a delicate task given the current economic environment.
The post China’s Q3 GDP growth beats expectations, but challenges remain appeared first on Invezz
