BEIJING: China’s stronger-than-expected 4.5 percent economic expansion in the third quarter, underpinned by new growth drivers and improving domestic demand, has boosted confidence that the world’s second-largest economy will achieve its full-year growth target, officials and analysts said.
The economy’s strengthening momentum is expected to extend into the final quarter of the year, they said, as policymakers are directing greater efforts to further bolster domestic demand, with a particular focus on shoring up investment and restoring confidence in the property market.
China’s GDP growth accelerated to 4.5 percent year-on-year in the third quarter from 4.3 percent in the second, the National Bureau of Statistics said on Monday. Growth in the first three quarters stood at 4.6 percent, within the country’s full-year target range of 4.5 to 5 percent.
“We expect GDP growth to pick up further in the fourth quarter as growth-stabilizing policies take effect, leaving little doubt that China will achieve its full-year growth target,” said Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International.
He attributed the pickup in third-quarter GDP growth mainly to faster industrial production, which expanded 5.1 percent year-on-year, up 0.4 percentage point from the second quarter.
Advanced manufacturing, in particular, accounted for much of that strength. Equipment manufacturing output climbed 10.2 percent year-on-year in the first three quarters, while high-tech manufacturing grew 14.3 percent, the NBS said.
Setting out priorities for the sector last month, President Xi Jinping emphasized the need to accelerate the development of a modernized industrial system with advanced manufacturing as the backbone, and to reinforce the foundations of the real economy, in an instruction conveyed at a national conference on advanced manufacturing held in Beijing.
The latest figures point to a continued shift toward new growth drivers, said Mao Shengyong, deputy head of the NBS.
“Preliminary estimates show that new growth drivers, led by advanced manufacturing, the digital and intelligent economy and modern services, contributed more than 40 percent of economic growth in the first three quarters,” Mao said at a news conference in Beijing.
Wang Jiaqiang, a senior researcher at the Bank of China Research Institute, said these sectors expanded at around 10 percent, describing their contribution to overall economic growth as “particularly significant”.
Domestic demand staged a modest rebound in September after softening in July and August. Retail sales — a key gauge of consumption — rose 1.1 percent year-on-year, up from 0.4 percent in August and the fastest pace since March, the NBS said.
Meanwhile, fixed-asset investment showed signs of stabilizing, with the year-on-year decline holding at 7.2 percent in the first three quarters, halting a steady slowdown since March.
Inflation has edged up alongside stronger domestic demand, with the GDP deflator — a broad measure of economy-wide prices — rising 1.5 percent year-on-year in the third quarter, its second straight quarter of positive growth, said Wang from Orient Golden Credit Rating International.
Chen Mengyun, a macroeconomic analyst at Shenyin & Wanguo Futures, said, “The recovery in prices should help lift corporate earnings and strengthen nominal GDP growth.”
Still, analysts cautioned that the recovery in domestic demand remains tentative, underscoring the need for targeted policy support even as the full-year growth target looks well within reach.
Further efforts to stabilize investment will be crucial, said Guo Liyan, deputy director of the Chinese Academy of Macroeconomic Research’s Economic Research Institute.
She called for closer policy coordination to make the most of the fourth-quarter construction window, with funding from new policy-based financial instruments reaching projects more quickly.
Wang from Orient Golden Credit Rating expected stronger, coordinated fiscal and financial support for consumption. He also saw room for broader policy easing to sustain growth into next year.
“There is still scope for growth-stabilizing measures, including across-the-board interest rate cuts, to help stabilize the economy,” said Wang, who forecast that GDP growth would accelerate to around 4.7 percent in the fourth quarter.
Global business leaders are similarly upbeat about China’s prospects. Rogier Janssens, president of Merck China, said the company has invested nearly 7 billion yuan ($1.05 billion) in China, its second-largest market, over the past decade.
“China’s sustained push toward higher value-added manufacturing is modernizing the entire supply chain,” he said. –The Daily Mail-China Daily news exchange item
