China GDP exceeds expectations in Q3, but risks remain

China’s economy recovered at a faster-than-expected pace in the third quarter, but stringent Covid-19 restrictions, a deepening housing crisis and global recession risks are challenging Beijing’s efforts to promote a vigorous revival over the next year.

The Gross Domestic Product (GDP) of the world’s second-largest economy grew 3.9% in the July-September quarter compared to the same period a year earlier, official data showed on Monday (24), above the pace of 3. 4% forecast in a Reuters poll of analysts, and accelerating from the 0.4% pace in the second quarter.

Publication of the data was scheduled for October 18, but was delayed until after the Communist Party Congress, which took place last week and led to Xi Jinping securing an unprecedented third term of leadership.

Despite the recovery, the economy is facing challenges on multiple fronts at home and abroad. The Covid-zero strategy and China’s problems and struggle in its real estate sector exacerbate external pressure from the Ukraine crisis and global slowdown due to rising interest rates to contain inflation.

A Reuters poll projected China’s growth will slow to 3.2% in 2022, far below the official target of around 5.5%, marking one of the worst performances in nearly half a century.

In the quarterly comparison, GDP grew 3.9% in the third quarter, against an expected 3.5% expansion and a 2.6% decline in the previous quarter.

Since late May, authorities have implemented more than 50 economic support measures, seeking to bolster the economy to ease job pressures, even as they downplay the importance of achieving the growth target, which was set in March.

Separate data showed industrial production rose 6.3% in September from a year earlier, beating expectations for a 4.5% gain and up from 4.2% in August.

But retail sales remained weak, rising 2.5%, worse than expectations of 3.3% and the 5.4% expansion in August.