The National Bureau of Statistics (NBS) will release the economic performance data for the first three quarters on October 19. Institutions generally predict that supported by resilient industrial production and service sectors, robust exports and the low-base effect, the economic performance in the third quarter is expected to maintain its upward momentum.

Since September, positive factors for economic activity have kept accumulating. As reflected by the leading indicator PMI, both the manufacturing PMI and non-manufacturing PMI rose month-on-month in September and returned to expansion territory, signaling an improvement in economic prosperity. Meanwhile, the year-on-year increase of the Producer Price Index (PPI) hit a nearly four-year high, with its month-on-month growth continuing to widen, indicating that upward price momentum is accelerating at high levels.

Wen Bin, Chief Economist of China Minsheng Bank, said industrial production recovered in September compared with August. The year-on-year growth of the value added of industrial enterprises above designated size is expected to rebound to around 6%, up from 5.2% in August.

Exports maintained relatively rapid growth in the third quarter. According to data from the General Administration of Customs, exports rose by 16.4% year-on-year in the first three quarters. Specifically, export volume in the third quarter exceeded 8 trillion yuan for the first time, growing by 22%.

On the domestic demand side, service consumption and infrastructure investment have picked up, sending positive signals.

NBS data shows that the services business activity index stood at 50.2% in September, rising by 0.9 percentage points month-on-month. As the Double Festival drew near at the end of September, demand in transportation and tourism was unleashed in advance, lifting the prosperity index of relevant industries. MOFCOM big data shows that during the Mid-Autumn Festival holiday, the average daily sales of key retail and catering enterprises nationwide increased by 6.1% compared with the same lunar period of last year.

Multiple institutions forecast that the year-on-year growth of total retail sales of consumer goods in September will edge up from 0.4% in August.

Indicators related to infrastructure investment improved since September. The construction business activity index reached 50.3% in September, an increase of 3.4 percentage points month-on-month, ending an eight-month run below the 50% threshold. The cement shipment rate rose by 3.6 percentage points year-on-year.

Wu Wei, analyst at China Logistics Information Center, analyzed that looking ahead to the fourth quarter, driven by multiple favorable factors including continuous disbursement of special-purpose bond funds, steady delivery of pro-growth policy effects and the arrival of the traditional year-end peak season, market demand in domestic investment and consumption is expected to rebound at a faster pace.

Zhao Wei, Chief Economist of Shenwan Hongyuan Securities, noted that accelerated issuance of special-purpose bonds and expanded coverage of policy-based financial instruments will help supplement investment funding. In 2026, policy-based financial instruments are tilted more toward advanced manufacturing. Coupled with continuous improvement in corporate profits in earlier periods, manufacturing investment still has room for growth within the year.

"Positive changes in the economy keep emerging, and the economy may continue a moderate recovery. With the gradual release of policy effects, macroeconomic stability is expected to strengthen from the fourth quarter of this year to the first quarter of next year," Zhao Wei emphasized.

Nevertheless, adverse impacts from the external environment are deepening, and the domestic imbalance of strong supply and weak demand remains prominent. The foundation for economic stabilization and improvement still needs to be consolidated. Experts argue that it is necessary to further strengthen counter-cyclical macroeconomic regulation.

The executive meeting of the State Council held on September 28 proposed to step up counter-cyclical macroeconomic regulation, promote sustained, upgraded and sound economic development, and strive to accomplish the annual goals and tasks for economic and social development. The meeting also stressed the launch of a batch of practical and effective incremental policies.

Relevant policies were rolled out shortly afterwards. On September 29, multiple ministries including the Ministry of Finance, the People’s Bank of China and the State Financial Regulatory Administration successively released a series of policies, focusing on fiscal and financial coordination and boosting effective investment. In October, the Ministry of Finance arranged to utilize 550 billion yuan of leftover local government debt quotas to enhance the general public budget guarantee capacity of county and district-level governments and support local authorities in expanding effective investment.

Guo Lei, Chief Economist of GF Securities, believes that judging from the above policy arrangements, the interest rate cut on Pledged Supplementary Lending (PSL) targets infrastructure and new infrastructure represented by the "Six Networks". Re-lending for agricultural support and micro and small enterprises serves private small and micro businesses, while mortgage interest subsidies are designed for the real estate sector and consumption. Other policies with further implementation potential include measures to boost employment and income growth.

From Wen Bin’s perspective, with existing policies delivering stronger effects and incremental policies being rolled out continuously, economic momentum in the fourth quarter is expected to keep picking up, making the achievement of annual economic and social development goals more secure.

Source: Shanghai Securities News