Chinese GDP has increased in growth – Newspaper Kommersant No. 198 (7399) of 10/25/2022

The Chinese economy grew by 3.9% in the third quarter after a sharp slowdown in April-June, when GDP growth was only 0.4%. Improvement in macro indicators is noted primarily in industry – it is supported, among other things, by China’s exports. The service sector, retail sales and imports are growing at a slower pace than at the beginning of the year. According to the results of the whole year, experts expect from the Chinese economy a modest growth rate of 3.2% for this country – it will be held back by the ongoing covid restrictions and the downturn in the real estate market.

China’s GDP growth rate rose to 3.9% in the third quarter after falling to 0.4% in April-June, China’s National Bureau of Statistics said. The improvement in the indicator occurred against the backdrop of continued coronavirus restrictions. In the first quarter, the growth in the size of the economy was 4.8%. The third quarter result was better than expected, but according to the results of the whole year, experts expect extremely weak growth – the International Monetary Fund recently downgraded its forecast for China’s growth to 3.2% this year and to 4.4% next, pointing to a cooling in the real estate market which has a significant impact on the country’s economy.

In the first three quarters of the year, China’s economic growth rate was 3%. This is significantly below the target set by the authorities of the country as a whole for 2022 at around 5.5%.

China’s main macro indicators began to recover by September – industrial production in the third quarter increased by 4.8% (4.1 percentage points higher than the previous quarter), including 6.3% in September (plus 2.1 points compared to August). According to the results of three quarters, the increase in the indicator year-on-year amounted to 3.9%, including in mining – 8.5%, in the production of equipment – 6.3%. The largest growth again fell on cars powered by new energy sources – plus 112.5% ​​and solar batteries – plus 33.7%. AT service sector China’s growth in the third quarter amounted to 3.2% year-on-year, while in the second quarter there was a decrease of 0.4%. Retail sales grew by 3.5% yoy, falling by 4.6% in the second quarter. Prices in annual terms increased by 2.6% year-on-year, month-on-month – decreased by 0.5%.

Capital investments in China increased by 5.7% year-on-year in the quarter, which is 1.5 percentage points more than in April-June. According to the results of three quarters, growth was comparable – plus 5.9%, while investments in infrastructure grew by 8.6%, in industrial production – by 10.1%, and investments in the production of electronics and telecom equipment increased by 28.8% . Capital inflows into Chinese real estate, meanwhile, declined by 8%.

The acceleration in GDP growth is partly due to the lifting of some coronavirus restrictions (in particular, the end of the lockdown in Shanghai), as well as the low base effect.

In quarterly terms, growth accelerated to 3.9% against a decline of 2.6% in April-June. In particular, industry is supported export. In dollar terms, its growth rates decreased from 7.1% in August to 5.7% in September, but taking into account the fall in export prices, when calculated in physical volume, an increase was noted, Capital Economics explains. Import in China, at the same time, it decreased by 0.3% year-on-year, which indicates a reduction in domestic investment, experts point out. ING Bank believes that the pace of economic recovery will depend on the severity of covid restrictions and the response of the Chinese authorities to new cases of infection.

Experts consider a possible deterioration in the quality of regulation as a long-term risk for the Chinese economy – following the congress of the Communist Party of China, it was announced that the heads of several regulators, including the Central Bank, as well as Premier Li Keqiang, will leave their posts. Wherein re-elected Chinese President Xi Jinping also announced a change in the economic course: from market reforms to achieving economic security and strengthening the role of the state.

Tatyana Edovina