China’s economy demonstrated stronger-than-anticipated growth during the summer, even as the real estate sector continued to weaken. The government, along with its controlled banks, infused substantial funds into infrastructure projects and the establishment of new factories, bolstering industrial production across various sectors such as chemicals and electric cars.
Released data revealed a notable increase in economic output from July to September compared to the preceding three months. The government’s concerted efforts in constructing more public works, including roads and sewage lines, coupled with extensive financing from state-owned banks for factory construction, contributed to this growth.
Over the past year and a half, China’s economy, which ranks as the world’s second-largest, faced considerable challenges. Housing sales decelerated, leading prominent developers to grapple with the prospect of insolvency. Additionally, the nation’s escalating debt load, accumulated over the past 15 years, continued to impede growth.
In the third quarter, spanning from July through September, China’s gross domestic product (GDP) exhibited a growth of 1.3 percent compared to the previous three months, according to China’s National Bureau of Statistics. However, economic growth for the second quarter was revised down to 0.5 percent. When extrapolated for the entire year, the third-quarter data indicated an approximate 5.3 percent growth for China’s economy, a notable improvement compared to the 2 percent annual rate in the second quarter.
Consumer spending, which faltered during the spring, appeared to stabilize in recent months. Retail sales saw a 5.5 percent increase in September compared to the same month the previous year, demonstrating an acceleration from the 4.6 percent pace noted in August.
China, with its economy facing challenges, turned to a familiar playbook to stimulate growth, maintaining a strategy of substantial public spending reminiscent of measures taken during the pandemic. The issuance of local government debt witnessed a 4.2 percent rise in the first eight months of the current year compared to the same period in the previous year, marking a significant 59 percent increase compared to the first eight months of 2019.
Sheng Laiyun, deputy commissioner of the National Bureau of Statistics, acknowledged China’s solid economic performance throughout the year, establishing a strong foundation for sustained growth. However, he highlighted concerns about an increasingly complex and uncertain external environment, coupled with insufficient domestic demand, necessitating further consolidation to strengthen the recovery and growth foundation.