Chinese Economy Surpasses Expectations Amid Real Estate Market Fears | Business and Economy

The Chinese economy performed better than expected in October, with retail sales and industrial production exceeding estimates, easing fears of a housing collapse.

Industrial production rose 3.5% in October from a year earlier, according to the National Bureau of Statistics, faster than the September reading and higher than economists’ expectations. Retail sales growth accelerated to 4.9%, above the estimate of 3.7% in a Bloomberg survey of economists.

Growth in fixed asset investment slowed to 6.1% over the first 10 months of the year, compared to a forecast of 6.2%. The unemployment rate surveyed is stable at 4.9%.

The better-than-expected figures will be a relief after economic momentum weakened in the second half of the year, with demand and supply under pressure. Beijing’s crackdown on the real estate market has slowed lending to a sector that accounts for up to 25% of GDP, while energy shortages have forced factories to cut production.

China’s strong economic figures come amid fears over the health of the country’s heavily indebted real estate market [FILE: Qilai Shen/Bloomberg]

“The national economy was generally stable and maintained the recovery trend,” the SNB said in a statement. “However, we must be aware that the international environment is always complicated and harsh with many unstable and uncertain factors.”

Separate data from the NBS showed house prices fell 0.25% in October from the previous month, a larger drop than in September.

The CSI 300 index continued its loss after the data dump, down 0.3% at 10:04 am in Shangahai.

The slowdown has put the spotlight back on policymakers, who have so far taken a low-key approach to stimulus, preferring to “fine-tune” policies rather than flood the supporting economy.

In line with this approach, the People’s Bank of China refrained from injecting additional liquidity into the financial system during its monthly liquidity operation on Monday, instead renewing all maturing loans.

Most economists expect Beijing to stick to real estate restrictions, which will lead to weaker growth next year. GDP growth is expected to slow to 3.5% in the last quarter, reach 8% for the full year and weaken to 5.4% in 2022, according to a Bloomberg survey of economists.


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