China's Economy Expected to Rebound 3.68% in Q3 Ahead of Party Congress

National Bureau of Statistics Releases Q3 GDP During Party Congress... President Xi Likely to Support Third Term
Chinese Economic Experts Forecast 3.47% GDP Growth This Year, IMF Projects 3.2%

[Asia Economy Senior Reporter Cho Young-shin] Ahead of the announcement of China's third-quarter Gross Domestic Product (GDP) on the 18th, there are forecasts that the Chinese economy will rebound. The 20th National Congress of the Communist Party of China (the 20th Party Congress), which will decide on President Xi Jinping's third term, will open on the 16th. The National Bureau of Statistics of China is expected to release statistics showing that the Chinese economy is recovering during the Party Congress period.

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According to a survey conducted by the Chinese economic media Caijing on 16 Chinese economic and financial experts, it was reported on the 12th that the Chinese economy is expected to grow by 3.68% year-on-year in the third quarter.

The Chinese economy grew by only 0.4% in the second quarter due to the spread of COVID-19 originating from Shanghai. China's "zero-COVID policy" left the economy in shambles in the second quarter. In addition, adverse factors such as rising international raw material prices due to Russia's invasion of Ukraine, rising international grain prices, and inflation concerns in the Western bloc including the United States have raised concerns that China's economy may not achieve the initially targeted growth rate of around 5.5% this year.

The annual economic growth rate forecast by Chinese economic experts is 3.47%. Although the third-quarter growth rate is expected to rebound, the consensus is that achieving this year's target will be difficult. The International Monetary Fund (IMF) estimates that China's economy will grow by 3.2% this year.

Chinese experts cited the September trade surplus (estimated at $79.7 billion), loan increases in September, and consumption growth rates as the basis for the third-quarter rebound. As of the end of August, China's trade surplus was $79.39 billion. Although the export growth rate has slowed, Chinese experts emphasized that exports are still steadily increasing.

Loans are also on the rise. According to the "Third Quarter Financial Statistics Report" released by the People's Bank of China the day before, yuan-denominated loans as of the end of September increased by 810.8 billion yuan from the previous month to 24.7 trillion yuan. The cumulative amount for September increased by 3.1 trillion yuan year-on-year to 27.77 trillion yuan. Household loans, which are directly linked to consumption, increased by 3.41 trillion yuan in the third quarter alone. Of these, short-term loans amounted to 1.09 trillion yuan, while medium- to long-term loans related to real estate increased by 2.32 trillion yuan.

The increase in loans appears to be due to the People's Bank of China's reduction of the Loan Prime Rate (LPR, benchmark interest rate). The increase in loans means that funds have been injected into the market. In fact, the M2 (broad money) balance, an indicator of cash liquidity in the market, was recorded at 262.66 trillion yuan as of September, up 12.1% year-on-year.

September retail sales are expected to show a growth rate in the 3.7% range. Although this is about 1.5 percentage points lower than the previous month, it was evaluated positively due to the stability of the Consumer Price Index (CPI) and the steady purchase of high unit-price goods such as automobiles. In particular, since consumption is concentrated in the fourth quarter during periods such as the National Day holiday (October 1?7) and Singles' Day (November 11), the dominant view is that the sharply declined Chinese retail sales will improve.

The South China Morning Post (SCMP) also reported that the Chinese economy will rebound in the third quarter. Citing Chinese financial data provider WIND, SCMP reported that the Chinese economy is expected to grow by 3.5% year-on-year in the third quarter. SCMP pointed out that factors such as the real estate slump, the spread of COVID-19, and local fiscal deterioration will hinder China's economic growth this year, and that the situation may become even more difficult next year. The consensus is that although the Chinese economy will rebound in the third and fourth quarters, achieving 5?6% growth in the near term will be difficult.

This content was produced with the assistance of AI translation services.