Experts stress resilience of China's economy

Experts have scotched rumors about the Chinese economy running into rough weather, saying that recovery continued in October, while consumption and industrial production improved, and the same trend will continue in the coming months, which is a testament to China's economic resilience and vitality.

They said the economy faces pressures from a still-weak domestic demand, souring private investment, ongoing stress in the property sector and mounting uncertainties, but underlined that more stimulus can consolidate the foundation for recovery.

Looking ahead, the economy will likely sustain its stable growth momentum with existing supportive measures taking effect gradually and more countercyclical adjustment measures in the offing, they said.

Liu Aihua, spokeswoman for the National Bureau of Statistics, said the economy had maintained recovery momentum in the first 10 months, "laying a solid foundation for meeting the objectives of full-year economic and social development".

The economy will likely continue to recover in the following months with the macro policies taking effect gradually, underpinned by the anticipated improvement in demand and production as well as the steady development in industrial transformation and upgrading, Liu said at a news conference on Wednesday in Beijing.

Figures released by the NBS showed that China's retail sales — a gauge of consumption — grew 7.6 percent year-on-year in October, up from 5.5 percent in September.

"Retail sales in October were particularly strong, beating even our above-consensus estimates, given sharp increases in holiday-related spending components, including catering, tobacco and alcohol, sports and entertainment, and communication equipment," said Louise Loo, lead economist at British think tank Oxford Economics.

She said the momentum may persist in the first quarter of 2024, given seasonal spending patterns and positive base effects for annual comparisons.

China's value-added industrial output also grew 4.6 percent in October, up from 4.5 percent in September, according to the NBS.

Loo said that fading destocking pressures likely contributed to an uptick in manufacturing activity, and notably three "new economy" sectors — electric vehicles, batteries and renewables — raced ahead, all growing at a double-digit pace year-on-year.

Despite the improvement in some key indicators, she said the drag from the property sector intensified in October, estimating that the weakness in housing salesand investments may stay through 2024, given the property correction process.

Loo highlighted the need for more stimulus to consolidate the recovery trend, saying that these anticipated supportive measures would help further stabilize the growth momentum.

In the January-October period, fixed-asset investment grew 2.9 percent compared with a year earlier, while in the January-September period, it increased 3.1 percent year-on-year. Real estate investment contracted 9.3 percent year-on-year, pulling down total private investments by 0.5 percent, NBS data showed.

Zhou Maohua, an analyst at China Everbright Bank, said that while it may still take some time for the property sector to recover, the fixed-asset investment will likely pick up, especially as the approval of a fresh 1 trillion yuan ($138 billion) in central government bonds suggests future acceleration in the implementation of key projects.

He warned of pressures from a still-weak domestic demand, souring private investment, stress in the property sector and uncertainties in the external environment, saying that macro policies should be kept consistent to promote the steady recovery of demand and stabilize prices.

Wen Bin, chief economist at China Minsheng Bank, said that considering the foundation for recovery is not solid yet, the country should further step up countercyclical adjustments to stabilize overall growth.

Referring to the recent tone-setting Central Financial Work Conference, Wen said the policy stance will stay accommodative, with focus on creating a favorable monetary and financial environment, expanding central government borrowing while resolving local debt problems, and stabilizing the property market.