Current quarter looking up
China's economy is expected to regain steam in the fourth quarter with the government's effective measures to coordinate COVID control and economic development along with stimulus policy measures gradually taking effect, economists and analysts said.
They said the recovery trend in industrial production will likely continue for the remainder of the year, and expect to see a gradual improvement in key economic indicators, including investment and consumption.
Their comments came after key economic data released by the National Bureau of Statistics on Tuesday showed China's economy has maintained a recovery trend in October, with steady growth in industrial production and investment, while consumption was still weak amid pressure from renewed COVID-19 outbreaks.
The NBS said China's value-added industrial output grew 5 percent in October from a year earlier after a 6.3 percent rise in September. And fixed-asset investment increased 5.8 percent in the January-October period, compared with a 5.9 percent rise in the first three quarters.
Fu Linghui, an NBS spokesman, said at a news conference on Tuesday that China's economy has sustained recovery momentum despite facing pressure from the increasingly complex and challenging global environment and frequent COVID-19 outbreaks at home.
Looking ahead, Fu said the economy will likely recover steadily with existing supportive policies taking effect gradually.
He said China's steady economic performance in 2022 has showcased the strong resilience of the economy, and growth will continue to recover in the future, supported by improved domestic demand.
When it comes to the latest economic data, Lou Feipeng, a senior economist at Postal Savings Bank of China, said new growth drivers have played a key role in boosting steady economic growth in October.
The NBS said value-added industrial output from high-tech manufacturing grew 10.6 percent year-on-year in October, 1.3 percentage points higher than that in the previous month. And investment in high-tech industries jumped 20.5 percent in the first 10 months.
Considering the government's effective measures to stabilize growth and the property market as well as its fine-tuned pandemic-prevention measures, Lou said the economy will likely regain steam in the fourth quarter with steady improvement in industrial production, consumption and real estate investment, and China still has room for fiscal and monetary policy support.
Zhou Maohua, an analyst at China Everbright Bank, attributed the steady growth in industrial production to continued recovery in domestic demand, a series of stimulus policies taking effect and resilience in foreign trade.
Zhou said the drop in retail sales is mainly due to renewed COVID-19 outbreaks, saying consumption will likely improve amid more precise COVID-19 containment and intensified efforts to expand domestic demand and stabilize growth.
The NBS said China's retail sales declined by 0.5 percent year-on-year in October, after the 2.5 percent year-on-year growth in September. Notably, China's online sales rose 4.9 percent year-on-year in the first 10 months.
Lu Ting, chief China economist at Nomura, warned of downward pressure from renewed domestic COVID cases, troubles in the property market and weaker global growth.
Despite headwinds, Louise Loo, senior economist at the Oxford Economics think tank, expects the pass-through of recent easing measures and authorities' data-dependent policy loosening in the coming months to support a tentative and bumpy recovery going forward.
"With domestic macro policy settings likely to remain loose as authorities increasingly look to stabilize the economy and the property sector, we expect activity indicators to bottom out and a tentative recovery to gather steam heading into 2023," Loo said.