China’s Q3 2023 Economic Growth Beats Expectations with 4.5% Expansion
China’s Economic Performance and Contributing Factors in Q3 2023
Q3 GDP Growth Surpasses Forecasts
BEIJING, Oct 19 (Reuters) - China's economic growth rebounded to 4.5% year-on-year in the third quarter, beating expectations and easing the pressure on policymakers for delivering more aggressive stimulus measures to meet the annual target.
The third-quarter gross domestic product growth rate, released by the National Bureau of Statistics (NBS) on Monday, beat the forecast for 4.4% growth in a Reuters poll, and improved from the more-than-three-year low of 4.3% in the April-to-June period.
Export Reliance and Domestic Demand Challenges
Beijing has leaned heavily on exports for growth this year, but that engine faces growing pressure as domestic demand remains weak and trade tensions with the European Union escalate.
Structural Shifts in the Economy
China's strategy of redirecting credit and resources from property towards high-tech industries has created a two-speed economy, where strong factory output and exports mask weak consumption and private investment.
Year-to-Date Economic Indicators
For January-September, the economy grew 4.6%, within the range of the government's annual growth target of 4.5%-5.0%.
On a quarterly basis, the economy expanded 1.2% in the third quarter, surpassing expectation for a 1.1% rise and accelerating from 0.9% in April-June.
Trade Surplus and International Relations
China's trade surplus widened more than expected in September as exports surged, keeping the country on track to surpass last year's record surplus of $1.2 trillion and likely intensifying trade tensions with major partners.
A deal with the EU to rein in Chinese hybrid-vehicle shipments could weigh on the booming auto trade.
Government Measures and Policy Responses
Support for Key Sectors
Beijing has recently expanded support for home buyers, unveiled measures to steer cheaper credit into sectors including infrastructure and technology and allocated 550 billion yuan ($82.28 billion) in unused government debt quotas to ease local governments' financial strain and expand infrastructure investment.
Authorities also stepped up fiscal support, including expanding loan interest subsidies for small private firms and consumers and tapping an 800 billion yuan policy-based financing tool to spur infrastructure investment.
Infrastructure and Fixed-Asset Investment Trends
Still, infrastructure investment shrank 4.2%.
Fixed-asset investment declined 7.2% in the first nine months, dropping at the same pace as in January-to-August period.
Retail Sales and Property Investment
Retail sales grew 1.1% in September, improving from the 0.4% rise in August and compared with an expected 0.6% rise. It marked the quickest growth since March.
Property investment fell 20.6% in the first nine months in September.
Limited Stimulus and Export Strength
Policymakers refrained from releasing large-scale stimulus, as strong goods exports, aided by a global AI-fuelled tech boom, should help the country to reach its annual growth target.
Industrial Output and Currency Exchange
Industrial output expanded 5.5% in September, accelerating from the 5.2% growth in August and was in line with expectations. It marked the quickest growth in six months.
($1 = 6.6846 Chinese yuan renminbi)
(Editing by Shri Navaratnam)
