“We’ll focus on boosting effective domestic demand, invigorating market entities and implementing already-released policies … to accomplish this year’s social and economic development goals,” Sheng said on Wednesday.

China’s economic recovery regains momentum, edges closer to annual target

“Overall, data in the third quarter supports our narrative that a stimulus-led cyclical pickup in China was under way, with credit impulse picking up,” said Louise Loo, lead economist at Oxford Economics.

2. Property sector bottoming out, or green shoots appearing?

Real estate investment in China – which accounts for about 20 to 30 per cent of total investment – fell by 9.1 per cent in the first three quarters, compared with a year earlier, contracting further from the 8.8 per cent drop in the first eight months of the year.

“Property indicators remained dismal, with no signs of an imminent bottoming out,” added Loo at Oxford Economics.

But analysts at Capital Economics said that, while the wider data on the property sector remained weak, green shoots are appearing.

“New housing starts continued to drop and are now at their lowest levels since 2005, suggesting that developers remain cautious. That said, property-easing measures have helped stabilise sales volumes, and sales values have started to pick up,” they said.

3. Consumption remains bright spot

China’s retail sales grew by 5.5 per cent in September, compared with 4.6 per cent growth in August, and higher than the 4.9 per cent growth predicted by Wind.

“China’s economic recovery continued in September, driven by better-than-expected retail sales,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management.

Consumption remained the bright spot for the economy, said analysts at HSBC, with services consumption being the key driver for the recovery.

4. Fixed-asset investment growth remains subdued

China’s fixed-asset investment expanded by 3.1 per cent in the first nine months of the year, compared with the same period last year, down from the 3.2 growth per cent in the first eight months of the year.

Fixed-investment growth remained subdued, said analysts at Capital Economics, as property investment continued to contract, while the boost to infrastructure investment from local government bond issuance appeared to have fizzled out.

5. Industrial output growth remains strong

China’s industrial output rose by 4.5 per cent in September, unchanged from August, but lower than the 4.6 per cent growth predicted by Wind.

Strong manufacturing activity in more advanced technology areas, such as electrical machinery and automobile production, as well as a pickup in energy production, were the key drivers, according to analysts at HSBC.

“After adjusting for seasonality, our calculations suggest that output growth remains strong,” they said.

6. Resilient labour market

China’s overall surveyed urban jobless rate stood at 5 per cent in September, down from 5.2 per cent in August.

“The resilience of the labour market probably helped to put a floor beneath consumer spending,” said analysts at Capital Economics, who added that there was also an increase in hours worked, in seasonally adjusted terms.

7. With annual target set to be achieved, what’s next?

Zhang at Pinpoint Asset Management said the government was less likely to launch new stimulus measures in the following months, as the annual economic growth target appears in reach.

“The focus of the government and the market will shift to the growth outlook for next year. The key issue is what growth target the government will set [for 2024] and how much fiscal easing will take place,” he added.

Loo at Oxford Economics agreed that the annual official growth target was now more or less assured, but warned of an increasing risk of a premature policy tightening.

Oxford Economics expects a further round of 10-basis-point interest rate cuts in the fourth quarter, a step up in the easing of homebuying restrictions and modest increases in state-directed infrastructure spending. They predict China’s economy will grow by 5.1 per cent in 2023.

“While we don’t think the official GDP figures should be taken at face value, there are enough positive signs in the recent data to suggest that the economy has turned a corner,” they said. “This partly reflects the recent step up in policy support, which looks set to continue over the coming months.”