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China’s economy rebounded at a faster-than-expected pace in the third quarter, but strict Covid-19 curbs and fears of a global recession have meant that growth was still well below the nation’s full year targets.
Gross domestic product in the world’s second-biggest economy rose 3.9% in the July to September quarter year-on-year, official data showed on Monday. That was above the 3.4% forecast in a Reuters poll of analysts.
Multiple polls of economic analysts forecast full year growth to slow to between 3.2% and 3.4% in 2022, far below the official target of around 5.5%, marking China’s weakest growth in four decades, excluding 2020 when much of the world’s economy was shutdown due to Covid-19. The Chinese economy is facing challenges on multiple fronts at home and abroad.
China’s zero-Covid strategy has stifled domestic consumption, while it’s also battling a crisis in the real estate sector – one of the largest contributors to GDP. Following years of explosive growth fuelled by easy access to loans, Beijing launched a crackdown on excessive debt in 2020. Property sales are now falling across the country, leaving many developers struggling and some owners refusing to pay their mortgages for unfinished homes.
The war in Ukraine and a global slowdown fuelled by interest rate hikes have cooled demand for Chinese goods, however exports still grew 5.7% in September from a year earlier, beating expectations.
Retail sales grew by 2.5% in September, below the forecast 3.3% rise, and coming in at less than half of August’s retail growth of 5.4%. In a sign of falling domestic demand, Tesla has slashed prices for its Model 3 and Model Y cars by as much as 9% in China, the world’s largest auto market.
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The quarter’s economic data was originally scheduled for release on 18 October but was delayed until after the Communist party Congress which took place last week and saw Xi Jinping extend his leadership for an unprecedented third term and introduce a governing body stacked with loyalists.
Policymakers in China had rolled out more than 50 economic support measures since late May, seeking to bolster the economy to ease job pressures. Political leaders have played down the importance of hitting the official growth target of 5.5%, which was set in March.
Speaking two weeks ago, Zhao Chenxin, a senior official at the National Development and Reform Commission, said “From a global perspective, China’s economic performance is still outstanding”.
China’s growth continues to outperform major economies like the US, Japan and the EU, but has slowed significantly in recent years.
Reuters contributed to this report
