BEIJING: In October, China’s economy exhibited renewed vigor with a notable uptick in retail sales and manufacturing, although the property sector continued to lag, according to government reports on Wednesday. Factory output surged 4.6% year-on-year, while retail sales saw a substantial 7.6% increase, attributed to strong consumer spending during the extended National Day holidays. However, real estate investment plummeted by 9.3%, prompting officials to recognize the ongoing industry “adjustment” following a crackdown on developer borrowing and the pandemic, which precipitated a crisis in the sector two years ago.
Almost a year ago, the disruptions caused by the pandemic to various sectors, including manufacturing, transport, and travel, ceased when China’s leaders abandoned their ‘zero-COVID’ policies aimed at curbing infections. Consequently, recent improvements in economic indicators for October also indicate a decline in growth rates compared to the same period last year. China’s recovery from the pandemic has been sporadic, but recent activity shows signs of resurgence, prompting many economists to revise their growth projections for this year to surpass the government’s target of approximately 5%.
During the summer, China experienced a slowdown in its economy due to weakening global demand for exports and a further decline in the property sector. Official data revealed a 4.9% annual expansion in July-September, surpassing analysts’ expectations of around 4.5%, yet notably slower than the 6.3% growth rate in the previous quarter.
The recent indications of renewed strength in the world’s second-largest economy coincide with President Xi Jinping’s upcoming meeting with U.S. President Joe Biden during a Pacific Rim summit in California.
Liu Aihua, a spokesman for the National Bureau of Statistics, highlighted China’s shift towards new growth models during a briefing in Beijing. This shift represents a multi-decade move away from rapid industrialization and heavy infrastructure investments towards a more sustainable growth trajectory driven by consumer spending.
Liu noted the economy’s ongoing improvement, attributing it to effective policies. However, he highlighted the fluctuating and challenging nature of its recovery. External pressure persists, domestic demand lacks sufficiency, and enterprises grapple with production hurdles while certain sectors pose concealed risks demanding attention.
The report emphasized the escalating role of consumer spending in propelling growth, accounting for 83.2% of economic growth from January to October, marking a 6% surge from the preceding year. Liu underscored the considerable growth potential, given the substantial income gap between urban and rural residents.
Particularly notable was the performance of the auto industry, witnessing a 10.2% surge in passenger car sales in October. The shift towards electric and hybrid vehicles drove this increase, with exports soaring by almost 50% to 391,000 units in October and a 66% rise this year to over 3 million units, as per the China Passenger Car Association’s recent report.
Yet, Liu acknowledged the constrained spending capacity of Chinese households and the persistent issue of employment.
Notably, the overall unemployment rate stood at 5% in October. The disclosure of unemployment rates for young workers ceased months ago when it surpassed 20%.
Liu reassured that efforts were underway by the statistics bureau and other relevant departments to enhance data collection and research on the matter. Updates on the situation would be released at an appropriate time.