China's economy expanded faster than expected in the third quarter, driven by strong exports and resilient factory output that helped offset sluggish domestic demand and reduced the immediate pressure on Beijing to deploy aggressive stimulus.
GDP grew 4.5pc year-on-year, according to National Bureau of Statistics (NBS) data released Monday. The reading beat the 4.4pc forecast in a Reuters poll and marked a recovery from the 4.3pc posted in the second quarter.
A surge in exports underpinned the stronger headline figure, widening China's trade surplus in September and keeping the country on track to surpass last year’s record $1.2 trillion surplus.
September activity metrics also showed momentum. Retail sales rose 1.1pc year-on-year, up from 0.4pc in August to record their fastest growth since March, though overall consumer spending remained subdued. Industrial output grew 5.5pc, accelerating from August’s 5.2pc pace to hit a six-month high.
Policymakers have held back from broad-based stimulus, betting that robust high-tech and tech-driven exports will keep full-year growth within the target range of 4.5 to 5.0pc. For the January-September period, the economy expanded 4.6pc.
"The key macroeconomic message is that China's economy remains supply- and production-side driven," said Yuhan Zhang, principal economist at The Conference Board's China Center, noting that boosting household consumption is critical for a more sustainable recovery.
Beijing’s reliance on exports faces growing friction, particularly as domestic demand lags and trade tensions with the European Union mount. An impending deal to limit Chinese hybrid-vehicle shipments threatens to cool the booming auto export sector. Furthermore, shifting credit away from real estate into high-tech manufacturing has fueled a two-speed economy, where manufacturing strength masks weak private investment and consumer confidence.
On a sequential basis, GDP rose 1.2pc in the third quarter, up from 0.9pc in Q2. NBS Deputy Head Mao Shengyong noted that new drivers—including high-end manufacturing, the digital economy, and modern services—contributed over 40pc to growth in the first nine months.
To support the real economy, authorities have expanded targeted fiscal tools, including lower mortgage costs, 550 billion yuan ($82.3 billion) in local debt quotas, interest subsidies for small firms, and an 800 billion yuan infrastructure financing mechanism.
Despite these efforts, underlying investment remains depressed. Fixed-asset investment dropped 7.2pc year-to-date, property investment plunged 20.6pc, and infrastructure investment shrank 4.2pc. Economist Tianchen Xu of the Economist Intelligence Unit noted that improved state investment has merely helped halt a sharper decline in overall investment.
Financial Mirror/AH
