China’s Q3 economic report was released on October 19. China’s GDP grew by 4.5% year on year in the third quarter and 4.6% year on year in the first three quarters, which is in line with the annual projected economic growth target, keeping its growth rate among the leading major economies worldwide.

Mao Shengyong, Deputy Director and Spokesperson of the National Bureau of Statistics (NBS), stated at a press conference held by the State Council Information Office on the same day that the national economy in the first three quarters featured four highlights: steady performance, emerging new growth drivers, optimized structure and improved quality and efficiency. Positive factors for high-quality development have kept accumulating, laying a solid foundation for achieving the annual economic growth target.

Overall Stable Economic Performance

Preliminary calculations by the NBS show that China’s gross domestic product (GDP) reached 1,071,071 billion yuan in the first three quarters, representing a 4.6% year-on-year increase at constant prices. The GDP growth stood at 4.5% in the third quarter, up 0.2 percentage points from the second quarter.

Key indicators including prices, employment, income and balance of payments remained generally stable. The surveyed urban unemployment rate averaged 5.2% in the first three quarters, unchanged from the same period of last year. The CPI rose by 0.9% year on year, witnessing moderate growth. Per capita disposable income of nationwide residents registered a nominal year-on-year increase of 5.3%. Total goods trade expanded by 18.8% year on year. Foreign exchange reserves have stayed above 3.4 trillion US dollars for six consecutive months, and the RMB exchange rate rose steadily amid fluctuations.

Mao Shengyong noted that the economy maintained overall stability in the first three quarters, with new growth drivers taking shape, better economic structure and improved quality and efficiency, giving a strong boost to high-quality economic development.

More positive signals have emerged since September. Major economic indicators including the value added of industrial enterprises above designated size, total retail sales of consumer goods, import and export volume, and the services production index all picked up from August.

High-Quality Development Becomes More Evident

“High-quality development” and “new growth drivers” were frequently mentioned at the press conference. Behind the 4.6% growth rate, sets of data reflect improvements in the quality and efficiency of economic expansion, demonstrating notable progress in high-quality development.

• Industrial structure keeps upgrading: In the first three quarters, new industrial growth drivers represented by high-end and digital manufacturing contributed over half of the growth in the value added of industrial enterprises above designated size. Both the equipment manufacturing industry and high-tech manufacturing posted double-digit year-on-year growth.

• Domestic demand serves as the main engine: Domestic demand contributed more than 70% to economic growth in the first three quarters, with final consumption expenditure contributing nearly 50%. Service consumption grew markedly faster than goods consumption. New types of consumption are burgeoning, and inbound consumption keeps expanding.

• Green development gains greater momentum: Energy consumption per unit of value added of industrial enterprises above designated size fell by 4.3% year on year. Green industries such as new energy vehicles, power batteries and energy-saving and environmental protection equipment registered rapid growth.

• The service sector expands capacity and improves quality: The service sector contributed 66.3% to economic growth in the first three quarters, up 5.6 percentage points year on year, becoming the primary driving force of growth. The value added of information transmission, software and information technology services, and leasing and business services rose by 10.4% and 12.3% year on year respectively.

Further Improvement Expected in Q4

A number of analysts interviewed by the Shanghai Securities News said that with accelerated implementation of existing policies and gradual effects of newly introduced stimulus policies, the economy is expected to improve further in the fourth quarter, with solid support for hitting the annual growth target.

Wang Qing, Chief Macroeconomic Analyst at Orient Jincheng, said that following the rollout of a raft of growth-stabilizing policies, investment growth is likely to bottom out and stabilize in Q4, and household consumption growth will also rebound. He expects the GDP growth rate to pick up further in the fourth quarter.

Wen Bin, Chief Economist of China Minsheng Bank, held that policies have been delivered at a markedly faster pace recently, with policy tools applied in a more flexible and targeted manner. Such measures help offset short-term downward pressures in economic operations and provide strong underpinning for stabilizing growth in Q4 and fulfilling the annual goals.

Source: Shanghai Securities News