China Q3 Economic Data (October 2023)
Andrew Hencic, Senior Economist
Date Published: October 18, 2023
China's GDP Beats Expectations – Rising 4.9% in Q3
- China's third quarter GDP grew 4.9% compared to the third quarter of 2022, beating expectations for a 4.5% year-over-year (y/y) expansion. On a quarterly basis the economy gained steam, rising 1.3% quarter-on-quarter (q/q), an acceleration from the downwardly revised 0.5% expansion (previously 0.8%) in the second quarter.
- Retail sales surprised to the upside as well, rising 5.5% y/y versus consensus expectations for a 4.9% gain.
- Industrial production grew roughly in line with expectations in September, registering 4.5% y/y against expectations for a 4.4% advance.
- Fixed asset investment also came in roughly in line with expectations, with total investment through the first nine months of the year registering 3.1% higher than in 2022. The real fly in the ointment is the ongoing struggles in the property sector where investment through September is 9.1% lower year-to-date (YTD) than last year – falling short of the 8.9% contraction consensus had expected.
- In line with the better-than-expected economic data, the urban unemployment rate fell to 5.0% from 5.2% in August.
Key Implications
- Today's release is a pleasant surprise as authorities have worked to stem the economy's struggles and restore a healthy growth trajectory. With this print, absent a steep deceleration in fourth quarter growth, meeting the 5.0% annual growth target for 2023 is all but assured. The uptick in retail sales in particular comes as a pleasant surprise as restoring consumer confidence and vitality is going to be a crucial step to a sustained recovery.
- While there were certainly some elements to cheer in the report, the persistent structural issues are reason for concern. The property market continues to struggle, weighing on prospects heading into next year. Moreover, the falling GDP deflator (-1.4% y/y) reflects an economy still dealing with excess capacity. This report provides some encouraging signals heading into the end of the year, but also serves to highlight the issues that continue to require attention.
Disclaimer
This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.