China GDP Growth Exceeds Expectations

(RTTNews) - China's economy expanded more than expected in the third quarter underpinned by policy support, suggesting that Beijing is all set to achieve its around 5 percent growth target this year as the property market downturn remains the only major drag on growth.

Gross domestic product posted an annual growth of 4.9 percent in the third quarter, the National Bureau of Statistics said on Wednesday. The rate exceeded the 4.4 percent that economists had penciled in.

However, the growth rate weakened from the 6.3 percent logged in the second quarter, which was largely due to the low base of comparison.

Quarter-on-quarter, GDP climbed 1.3 percent, much faster than the revised 0.5 percent expansion seen in the second quarter and the expected rate of 1.0 percent.

In September, industrial production grew 4.5 percent annually, the same rate as seen in August and bigger than the 4.3 percent rise economists had forecast.

At the same time, retail sales growth improved to 5.5 percent from 4.6 percent in August. Sales were forecast to climb 4.9 percent.

Reflecting the sluggishness in the property market, fixed asset investment climbed only 3.1 percent during the January to September period, data showed.

The pace of growth softened from 3.2 percent in January to August. Property investment plunged 9.1 percent from a year ago. The jobless rate fell to 5.0 percent in September, while the rate was expected to remain unchanged at 5.2 percent.

Last week, the International Monetary Fund downgraded China growth outlook citing the lower investment in the country amid the property sector crisis. The economy is projected to expand 5.0 percent this year and 4.2 percent next year. The economy has clearly turned a corner thanks to policy support, economists at Capital Economics said. They expect a further recovery over the coming quarters.

ING economist Robert Carnell said, "Today's report shows that incrementally, China's economy is making progress."

Although the pockets of weakness are likely to remain drags on growth for some time, other parts of the economy are taking up the slack, and cautious optimism is probably warranted, added Carnell.