BEIJING: Several third-quarter indicators due out on Friday, including exports, are expected to show that the Chinese economy is still on a sustained recovery track, even as downward pressure persists due largely to a deteriorating external environment, Chinese economists said on Thursday.
While the pressure of a slowdown is expected to continue to weigh on the world’s second-largest economy, policy measures coupled with improving endogenous growth drivers will ensure that China will reach its annual GDP growth target of about 5 percent in 2023, economists said. They expect a relatively lower growth rate of above 4 percent for the third quarter alone, due to a high base in 2022.
China is scheduled to release a batch of data on Friday for September and the third quarter, including trade, the producer price index (PPI) and the consumer price index (CPI). Third-quarter GDP data will be released next week.
Among the indicators set for release on Friday, figures for exports, a major growth driver for the Chinese economy, and the CPI are drawing widespread attention amid slowdown pressures.
In the first eight months of 2023, China’s total trade reached 27.08 trillion yuan ($3.7 trillion), down 0.1 percent year-on-year, while exports grew by 0.8 percent, according to official data. However, in US dollar terms, China’s total trade declined by 6.5 percent year-on-year.
Trade activity likely continued the recovery that started at the end of August, and the third-quarter declines in US dollar terms likely narrowed, thanks to factors such as a boost from economic stimulus policies, Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Thursday.
The CPI has also drawn much attention, as declines in previous months prompted speculation about deflation. In August, however, the CPI returned to positive territory, with a gain of 0.1 percent, offering a resounding rebuttal to claims of a deflation crisis in the world’s second-largest economy.
Chinese economists said that the positive trend will continue, with some forecasting CPI growth of 0.2 percent in September, citing a rebound in consumption and overall economic conditions. The PPI, a main gauge of factory gate prices, was expected to show further improvement, after it fell by 3 percent in August compared with a 4.4 percent drop in July.
Overall, the steady recovery of the economy continued in the third quarter, with improvements seen in various areas, including consumption, economists said.
“If the consumption recovery meets expectations with double-digit growth, China’s third-quarter GDP could have grown by as much as 5 percent year-on-year,” Tian Yun, a Beijing-based economist, told the Global Times on Thursday. “Even if it didn’t reach 5 percent, it would have been very close.”
Several Chinese economists and institutions have also forecast a GDP growth of above 4 percent for the third quarter. The Institute of Economics at the Chinese Academy of Social Sciences, for example, said that the economy might have grown by 4.6 percent year-on-year in the third quarter.
However, a growth rate of 4 percent to 5 percent as forecast would mean a significant slowdown from 6.3 percent growth in the second quarter. Apart from downward pressure, another major factor behind the seemingly slower growth is a high base in the third quarter of 2022. GDP growth saw a rapid recovery from 0.4 percent in the second quarter to 3.9 percent in the third quarter, economists noted.
Zhou Rong, a senior researcher at the Chongyang Institute for Financial Studies at Renmin University of China, said that the solid recovery in domestic tourism during the summer travel peak and the recent long holidays helped lift the overall economic recovery.
Chinese economists expect an accelerating recovery, particularly in the fourth quarter.
“The fourth quarter is typically a peak season for imports and exports, and various institutions also have higher expectations for the recovery. Also, previous stimulus measures will further take effect in the fourth quarter… and more policies are also expected, which will further boost the recovery,” Gao said.
Tian also said that the economic recovery will further gain pace in the fourth quarter, with a GDP growth rate of above 5 percent, which would help lift full-year GDP to above 5 percent and achieve the annual growth target of about 5 percent.
The Ministry of Commerce (MOFCOM) said on Thursday that it will further take various measures to boost the recovery in domestic consumption, and accelerate the implementation of measures already taken to boost sales of cars, furniture and electronics.
Also on Thursday, the MOFCOM and eight other ministries issued a guideline on promoting high-quality development in the automotive aftermarket. The guideline included seven policy measures, including improving market conditions.
