China: GDP growth above expectations in the third quarter – 10/24/2022 at 07:29

Workers working on a construction site in Shanghai

by Ryan Woo and Ellen Zhang

BEIJING (Reuters) – China’s economy accelerated to a faster-than-expected pace in the third quarter but COVID-19 restrictions, a housing market slump and global downside risks are undermining Beijing’s moves to foster a solid growth in 2023.

Gross domestic product (GDP) grew by 3.9% at an annual rate over the July-September period, according to official statistics released on Monday.

Analysts polled by Reuters had expected GDP growth of 3.4%, after the 0.4% growth recorded in the second quarter on an annual basis.

On a quarterly basis, GDP grew by 3.9% against a contraction of 2.6% in April-June and a Reuters consensus of +3.5%.

The publication of the data, initially scheduled for October 18, was postponed due to the holding of the Communist Party Congress, which concluded with the renewal for a third term of Xi Jinping at the head of the party.

Official statistics for the month of September alone, also published on Monday, show a growth of 6.3% in industrial production compared to September 2021, after +4.2% in August. The Reuters consensus was for a 4.5% rise.

Despite its rebound, the Chinese economy is facing several difficulties, both nationally and internationally. China’s “zero COVID-19” strategy and the crisis in the powerful real estate sector have exacerbated the external pressure maintained by the war in Ukraine and the rise in interest rates.

According to a Reuters poll, China’s growth is expected to slow to 3.2% in 2022, well below the official target of around 5.5%.

Exports in September rose 5.7% year on year, a pace above expectations but the slowest since April. Imports rose just 0.3%, below the consensus of 1.0%.

At the same time, retail sales increased by 2.5% year on year in September, whereas they were expected to rise by 3.3% after +5.4% in August.

More importantly, the price of new homes fell for the second consecutive month in September, by 0.2% over one month.

“This data set sends an important message: even if anti-COVID measures have become more flexible (…), the restrictions remain a great uncertainty for the economy with the context of the real estate crisis,” said Iris Pang. , Chief Economist at ING. “This uncertainty means that the effectiveness of pro-growth policy would be compromised.”

Since the end of May, Beijing has deployed more than 50 measures to support the economy, although the authorities have played down the importance of reaching the growth target, set in March.

(Report Ryan Woo and Ellen Zhang, French version Laetitia Volga)


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