China’s mixed economic data in October pointed to an uneven and precarious recovery, with Beijing needing to scale up its basket of supportive policies in the face of persistent headwinds in the property market, private investment, as well as debt risks, which continue to haunt the overall growth outlook.
The reading was higher than the 7.3 per cent growth predicted by economists surveyed by Chinese data provider Wind.
However, the property market continues to drag on the economy and poses a major downside risk to China’s growth outlook.
Real estate investment – which accounts for about 20 to 30 per cent of the total investment – fell by 9.3 per cent in the first 10 months of the year compared with a year earlier, contracting further from the 9.1 per cent drop in the first three quarters.
The reading was lower than the 9.2 per cent drop forecast by Wind.
“There are still many external instabilities and uncertainties, and domestic demand remains insufficient,” the NBS said on Wednesday.
“The foundation of the economic recovery still needs to be consolidated.”
Fixed-asset investment – a major growth engine – expanded by 2.9 per cent in the first 10 months of the year, compared with the same period last year, but was down from the 3.1 growth per cent in the first nine months of the year.
In comparison, private investment fell by 0.5 per cent in the first 10 months, compared with a 0.6 per cent drop in the first nine months of the year.
Industrial production and retail sales grew faster in October on a [year-on-year] basis, but this is partly due to lower base last year
In October, industrial output rose by 4.6 per cent, up from 4.5 per cent growth in September, and higher than the 4.3 per cent expansion predicted by Wind.
“Industrial production and retail sales grew faster in October on a [year-on-year] basis, but this is partly due to lower base last year,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, adding that on a month-on-month basis, both grew at similar pace as in September.
“Domestic demand is still weak. Both monetary and fiscal policies are turning more supportive, which hopefully will help to boost domestic demand in 2024.”
Meanwhile, the overall surveyed urban jobless rate stood at 5 per cent in October, unchanged from September.
“China’s activity data for October were mixed, with retail sales surpassing expectations and fixed-asset investment disappointed again,” said Zhou Hao, chief economist at Guotai Junan International in Hong Kong.
“Clearly, the property sector remains a weak spot for the economy, which requires further support in the foreseeable future. It is rumoured that the Chinese central bank is considering pumping liquidity via the [pledged supplementary lending tool] to help the troubled property market, which seems to be in line with [Wednesday’s] data report.
“In addition, the [People’s Bank of China] also injected a net 500 billion yuan (US$68.7 billion) of liquidity via the [medium-term lending facility on Wednesday morning], suggesting that the monetary policy will remain supportive to aid the economic recovery.”
China’s economy turns corner: 7 takeaways from GDP, September activity data
China’s economy turns corner: 7 takeaways from GDP, September activity data
The 4.9 per cent year-on-year growth also meant China is expected to need year-on-year growth of only 4.4 per cent in the fourth quarter to achieve the “around 5 per cent” full-year growth target.
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