BEIJING: China's economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth suggested persistent risks for one of the few drivers of global demand.
Gross domestic product (GDP) grew 4.9% in July-September from a year earlier, official data showed on Monday, slower than the 5.2% forecast by analysts in a Reuters poll but faster than the second quarter's 3.2% growth.
"China's economy remains on the recovery path, driven by a rebound in exports. Consumer spending is also headed in the right direction, but we cannot say it has completely shaken off the drag caused by the coronavirus," said Yoshikiyo Shimamine, chief economist at Dai-ichi Life Research Institute in Tokyo. "There is a risk that the return of lockdowns in Europe and another wave of infections in the United States will hurt consumer spending and trigger more job losses, which would be a negative for China's economy."
The weaker-than-expected headline figures weighed on China's yuan and mainland stock benchmarks and capped broader market gains in Asia. The world's second-largest economy grew 0.7% in the first nine months from a year earlier, the National Bureau of Statistics (NBS) said.
Policymakers globally are pinning their hopes on a robust recovery in China to help restart demand as economies struggle with heavy lockdowns and a second wave of coronavirus infections. China has partially emerged from a record slump caused by coronavirus shutdowns in the first months of the year.
On a quarter-on-quarter basis, GDP rose 2.7% in the third quarter, the NBS said, compared with expectations for a 3.2% rise and an 11.5% rise in the previous quarter. But despite the headline disappointment, analysts were encouraged by a broader upturn in consumption and continued factory strength.
Retail sales grew 3.3% in September from a year earlier, speeding up from a modest 0.5% rise in August and posting the fastest growth since December 2019. Industrial output grew 6.9% after a 5.6% rise in August, showing the factory sector's recovery was gaining momentum. Fixed-asset investment rose 0.8% in the first nine months from a year earlier, returning to year-to-date growth for the first time this year.
In the property sector, investment rose 12% in September from a year earlier, the fastest pace in nearly 1-1/2 years, providing a key support for broader investment. China's retail spending has lagged the comeback in factory activity this year as heavy job losses and persistent worries about infections kept consumers at home, even as restrictions lifted.
However, recent indicators suggest consumer activity is now turning around. In the travel sector, domestic passenger flights in September beat their Covid-19 levels, a sign that that segment of the market is approaching a full recovery, even as international borders remain largely shut.
Auto sales marked a sixth straight month of gains in September while Ford Motor Co's China vehicle sales jumped 25% in the third quarter from a year earlier. The breakdown of GDP showed final consumption accounted for 1.7 percentage points growth, while capital formation accounted for 2.6 percentage points and net exports contributed 0.6 percentage points, NBS said.
The coronavirus outbreak, which caused China's first contraction since at least 1992 in the first quarter, is now largely under control in the country, although there has been a small resurgence of cases in the eastern province of Shandong.
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