China's industrial production growth advanced significantly to 6.3% y/y in September, mainly due to policy support on targeted sectors and a low base. (ddp)
3Q GDP rebounded broadly. China's 3Q GDP growth beat expectations at 3.9% y/y (consensus: 3.3%), up from 0.4% in 2Q. The quarterly rebound was led by investment (+5.5% y/y) and retail sales (+3.5% y/y).
FAI growth lifted by infrastructure and manufacturing. FAI growth improved further to 5.9% y/y in January–September from 5.8% y/y in January–August. FAI manufacturing and infrastructure were the main drivers, up by 10.1% and 8.6% y/y, respectively, in the first nine months of the year, partially offsetting the drag from FAI property.
IP growth accelerated notably led by auto, infrastructure and high tech. Industrial production (IP) growth advanced significantly to 6.3% y/y in September, mainly due to policy support on targeted sectors and a low base. Among key sectors, auto production was robust at 23.7% y/y thanks to ongoing stimulus. Production of other capital goods recorded high single-digit to low-teen growth.
Retail sales growth slowed on COVID restrictions. Retail sales growth slowed to 2.5% y/y in September from 5.4% y/y in August. Auto sales (~10%of total sales) stayed robust at 14.2% y/y, while consumer staples were resilient with mid-to-high single-digit growth. Communication-device sales also rebounded. Still, most consumer discretionary sectors slowed down to varying degrees. Housing-related items stayed weak, while catering slowed to -1.7% y/y on tightened COVID restrictions.
Expect continued recovery ahead. GDP growth is expected to reach about 3% in 2022, before rebounding to around 5% y/y in 2023 on strong infrastructure, resilient manufacturing and recovering consumer spending.
Main contributor - Yifan Hu, Kathy Li
Content is a product of the Chief Investment Office (CIO).
Original report - China's 3Q GDP rebound bodes well for continued recovery, 24 October 2022.
