October 25, 2022
China’s economy recovered more quickly than expected in the third quarter, but long-term growth will be hampered by COVID-19 restrictions that continue, a protracted real estate collapse, and dangers of a worldwide recession.
The world’s second-largest economy grew 3.9% from July to September compared to a year earlier, according to official statistics, outpacing the 3.4% rate predicted in a Reuters poll and above the 0.4% increase in the second quarter. This growth was aided by a variety of government initiatives.
The coronavirus outbreak that resulted in lockdowns, along with a slowdown in export growth and additional cooling in the vital real estate market, caused domestic demand to decline at the end of the quarter, portending a rocky recovery.
The fact that China is likely to maintain its extremely tight COVID laws, which are supported by the government’s Communist Party, which completed its top leadership reshuffle on Sunday with Xi Jinping winning a third term in office, casts further doubt on the future.
On account of worries about the economy, Hong Kong shares plunged to 13-year lows while the onshore yuan hit a 15-year low.
The 3.9% GDP increase was driven by final consumption, which contributed 2.1 percentage points, while investment and net exports contributed 0.8 and 1.1 percentage points, respectively.
The urban per capita consumption in China decreased 0.2% year over year in the nine months leading up to September.
Source: Reuters
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