• China 3Q22 GDP growth grew 3.9% YoY

• Retail sales growth weakened in September however

• China's industrial output growth speeds up further in September

• Fixed asset investments grew 5.9% YoY YTD

• Exports weakened in September, imports up by 0.3%

• Inflation remained moderate while PPI registered another large drop

• China’s GDP growth rebounds at faster pace in 3Q, but risks loom

After nearly a week of delay, China released a better-than-expected gross domestic product (GDP) growth for the third quarter. China's economy managed to walk out of a V-shaped recovery in the third quarter, as the world's second largest economy is on track for a steady rebound under the government's supportive policies, despite headwinds such as the lingering coronavirus challenges. The Chinese economy grew by 3.9% YoY in 3Q22, quickening from the 0.4% YoY pace in the second quarter. In the first three quarters, China's GDP grew by 3.0% YoY. The announcement was planned for last week but was delayed due to the 20th National Congress of the Chinese Communist Party (CCP), while the ruling Communist Party met to award President Xi Jinping a new term as leader.

On a quarter-on-quarter basis, GDP grew 3.9% from -2.7% QoQ in 2Q22 as the economy rebounded from the pandemic-hit 2Q22.

The secondary industry recovered strongly in 3Q22 with 5.2% YoY (2Q22: +0.9%) expansion and while the tertiary industry returned to growth with a 3.2% YoY gain from -0.4% in 2Q22, the pace was sub-par. Meanwhile, primary industry moderated to 3.4% YoY from 4.4% in 2Q22.

Overall, China's economy is on more solid ground in 3Q22 with major indicators showing positive signs of stabilization. Many major economic indicators saw significant improvements compared with that in the second quarter. However, despite the rebound, the economy faces challenges on multiple fronts at home and abroad. China’s zero-COVID strategy and strife in its crucial property sector have exacerbated the external pressure from the Ukraine crisis and a global slowdown due to interest rate hikes to curb red-hot inflation.

Source: BIMB Securities Research - 26 Oct 2022