Economic recovery remains unstable amid challenges, says National Bureau of Statistics
China's economy is expected to gain firmer footing in the rest of the year as the softening growth figures for the past quarter trigger stronger macro policy support and better coordination among multiple policy objectives, officials and experts said on Monday.
They commented after the National Bureau of Statistics said on Monday that the country's gross domestic product in the third quarter grew 4.9 percent year-on-year, down from 7.9 percent in the second quarter, marking the slowest pace in a year.
In the January-September period, China's GDP grew by 9.8 percent year-on-year to 82.31 trillion yuan ($12.8 trillion), down from 12.7 percent in the first half, due to elevated commodity prices, the domestic COVID-19 resurgence and heavy rainfall in some parts of the nation, the bureau said.
"China's economic recovery remains uneven and unstable amid rising challenges," said Fu Linghui, a spokesman for the bureau.
Fu said that power curbs in some areas have impeded industrial production, though the impact will ease amid policy measures to boost power and coal supplies, while a slowing property sector has had a limited drag on the economy.
China's industrial production grew 3.1 percent year-on-year last month, down from 5.3 percent in August. The growth in property development investment came in at 8.8 percent in the first nine months of the year, down from 10.9 percent a month earlier, the bureau said.
Despite the mounting headwinds, multiple factors will combine to ensure the fulfillment of China's full-year economic development goals, including stronger macro policy support, faster growth in consumption and infrastructure investment, and a vibrant high-tech sector, officials and experts said.
"With growing fiscal strength and relatively large space in monetary policy, China is able to roll out timely, effective measures in line with the changing situation and keep the economy running steadily," Fu said.
On the fiscal front, a considerable amount of special local government bonds are expected to be issued in the fourth quarter to underpin infrastructure investment, said Xu Xianchun, a professor of economics at Tsinghua University. Also, the central bank has set the goal of maintaining a proper growth in credit. This indicates that monetary policy is likely to loosen while remaining overall stable, he said.
The country's infrastructure investment expanded by 1.5 percent year-on-year in the first nine months of this year, while the total fixed-asset investment for the same period grew by 7.3 percent year-on-year, according to the bureau.
Xu added that an overall healthy job market has laid the foundation for consumption to pick up steam amid a stabilized epidemic situation, while the dynamic development of new industries and new business models will provide a key buffer against headwinds.
The growth in retail sales recovered to 4.4 percent year-on-year last month from 2.5 percent in August thanks to the effective containment of domestic COVID-19 cases. The job market also improved with September's surveyed urban unemployment rate standing at 4.9 percent, compared with 5.1 percent a month earlier, the bureau said.
"It is also critical for government bodies to take more coordinated, concerted steps in executing policy agendas, on which the central government has already given greater emphasis," said Kang Yong, chief economist at KPMG China.
For instance, better coordination between economic stability and green development can be achieved by leveraging more market mechanisms in promoting energy consumption reduction and stopping campaign-style administrative restrictions on power use and production, Kang said.
Experts said it is sensible for stronger macro policy support to come in the form of tools targeted at smaller businesses, including exporters who face growing difficulties due to surging raw material and shipping costs, and COVID-19-related uncertainties in terms of external demand.
Li Qiyuan, director of the export department at Jiangsu Jinlong Technology, a knitting and weaving machinery manufacturer, said the company's export orders have remained stable so far this year, but uncertainties have emerged with falling exports of knitting machines to India and Vietnam due to COVID-19.
"Small and medium-sized manufacturers are facing pronounced difficulties," said Chen Yanbin, a professor of economics at Renmin University of China in Beijing.
Cutting the reserve requirement ratio of some banks and putting targeted relending facilities into use can boost lending to smaller businesses and alleviate their pressure, Chen said.
Zhong Nan contributed to this story.