Q3 GDP figure points to steady recovery

China's economy rose by a faster-than-expected 3.9 percent year-on-year in the third quarter, pointing to a steady recovery aided by existing policy support.

Third-quarter growth picked up from a 0.4 percent rise in the second quarter, when economic activities were severely disrupted by COVID-19 outbreaks, beating expectations of 3.4 percent for the third quarter by economists in a Reuters poll.

Experts said the economy will likely continue to recover in the fourth quarter amid strong policy support and a continued recovery in activities, and they expected to see the further implementation of stimulus measures to stabilize growth and improve the efficient deployment of resources to support consumption and infrastructure investment.

They commented after the National Bureau of Statistics said on Monday that in the first three quarters, China's GDP grew by 3 percent year-on-year to 87.03 trillion yuan ($12 trillion), compared with 2.5 percent in the first half of the year, the bureau said.

Lloyd Chan, a senior economist at the Oxford Economics think tank, said the better-than-expected outcome implies the economy has recouped its COVID-induced output loss in the second quarter, with GDP also rising above the level in the first quarter.

Zhou Maohua, an analyst at China Everbright Bank, attributed the steady economic rebound to the gradual recovery in economic activities, the government's solid steps to ease burdens for enterprises and stabilize growth, steady recovery in demand and the impact of a low base in the same period last year.

Figures released by the bureau showed China's value-added industrial output expanded by 6.3 percent in September, while fixed-asset investment rose 5.9 percent year-on-year in the first three quarters.

Chan noted that September's industrial production growth was at the fastest pace in eight months and retail sales also improved in the third quarter from the second quarter, providing strong support for the growth rebound in the third quarter.

Retail sales grew 3.5 percent in the third quarter, the bureau said, up from the 4.6 percent decline in the second quarter.

"We expect the recovery will continue over the rest of this year and into 2023, underpinned by macro policy support and infrastructure spending," Chan said.

However, he said the COVID-19 pandemic may continue to hinder the recovery in domestic activities. "Although industrial output gathered pace in September, this trend will be very difficult to sustain given the increasingly challenging external environment, which is adding to domestic growth challenges."

Zheng Houcheng, director of the Yingda Securities Research Institute, said China's economy will continue to improve in the fourth quarter due to a low base effect and forceful infrastructure spending.

Meanwhile, he warned of economic risks and challenges ahead, with renewed COVID-19 disruptions, a property downturn continuing to weigh on growth and weaker external demand curbing exports.

Zhou, from China Everbright Bank, said he expected to see a notable economic rebound in the fourth quarter given better control of COVID-19, normalization of activities and stimulus policy measures gradually taking effect.