Economy of world’s second-biggest, China, rebounded at a faster-than-expected pace in the third quarter (Q3), but strict Covid curbs, a prolonged property slump, and global recession risks are challenging Beijing’s efforts to foster a robust revival over the next year, reported by Reuters.
According to the report, aided by government measures to revive activity, gross domestic product (GDP) in China economy rose 3.9 per cent in the July-September quarter year-on-year (YoY), official data showed on Monday, above the 3.4 per cent pace forecast in a Reuters poll and quickening from the 0.4 per cent pace in the second quarter. However, weak demand at home and slowing exports point to a bumpy recovery as China looks set to continue with its existing zero-Covid strategy after the country wrapped up its twice-a-decade leadership reshuffle on Sunday, with Xi Jinping securing a third term as general secretary of the ruling Communist Party.
Hong Kong stocks tumbled and Chinese stocks fell on Monday, with the yuan weakening, after the new membership line-up of China’s top governing body heightened fears among investors that Xi will double down on ideology-driven policies at the cost of economic growth.
On a quarterly basis, GDP rose 3.9 per cent in the third quarter, versus a revised drop of 2.7 per cent in April-June and an expected 3.5 per cent rise. The data was originally scheduled for release on October 18 but was delayed amid the key Communist Party Congress last week.
“The Chinese economy has great resilience, potential and latitude,” Xi said on Sunday as he unveiled the top leadership team of the Communist Party for the next five years. “Its strong fundamentals will not change, and it will remain on a positive trajectory over the long run.”
The economy was buoyed by the manufacturing sector, with separate data showing industrial output in September rose 6.3 per cent from a year earlier, beating expectations for a 4.5 per cent gain and 4.2 per cent in August.
Despite the rebound, China faces challenges on multiple fronts at home and abroad. China’s pandemic curbs and strife in its key property sector have exacerbated the external pressure from the Ukraine crisis and a global slowdown due to interest rate hikes to curb red-hot inflation. A Reuters poll forecast China’s growth to slow to 3.2 per cent in 2022, far below the official target of around 5.5 per cent, marking one of the worst performances in almost half a century.