The Chinese economy will maintain in positive recovery momentum throughout the fourth quarter of 2023 as third-quarter economic data beat expectations, according to Zhu Haibin, chief China economist at J.P. Morgan.

In a recent interview with Xinhua, the economist said that shortly after China released its economic data for the first three quarters, J.P. Morgan revised its forecast for China’s gross domestic product (GDP) growth upward in 2023 from five per cent to 5.2 per cent.

“China’s third-quarter GDP beat expectations. Following the better-than-expected economic data for August, the economic performance in September again beat our expectations, as major indicators such as industrial production, retail sales, and exports were surprisingly better,” Zhu explained. 

“The projected 5.2 per cent growth remains an excellent growth rate around the world,” he added.

The Chinese economy expanded 4.9 per cent year on year in the third quarter despite a high comparative base in the corresponding quarter last year. In the first three quarters of 2023, the economy grew 5.2 per cent, according to data released by the National Bureau of Statistics (NBS) earlier this month. Government officials said these results laid a solid foundation for realizing the nation’s annual five per cent growth target for 2023.

Zhu noted that the new energy industry and infrastructure sector saw relatively good performances in the first three quarters.

“In the first three quarters of 2023, the output of solar cells soared by more than 60 per cent year on year; the output of new energy vehicles also increased by over 30 per cent, which maintained a relatively high growth rate,” he said.

“After the impact of the COVID-19 epidemic subsided, the consumption of services such as catering, accommodation, tourism, and transportation proliferated and saw a remarkable recovery,” Zhu said.

He mentioned that the savings rate among rural households fell notably in the third quarter, suggesting that income expectations were improving among rural migrant workers and low- and middle-income families amid improvements in the manufacturing and construction sectors.

According to an NBS survey, the number of the labour force from rural areas working in the cities rose 2.8 per cent year on year as of the end of the third quarter. The improved expectations for income growth among the migrant workers helped boost consumption.

The economist added that amid the sluggish global economic recovery, China’s exports have shown strong resilience. “On one hand, diversification of export destinations has helped stabilize foreign trade. On the other hand, exports of automobiles rose rapidly, and electronic products exports also showed a rapid recovery trend.”

According to the China Association of Automobile Manufacturers, China exported nearly 3.4 million vehicles in the first nine months of this year, up 60 per cent year on year. In the first half of 2023, China overtook Japan as the world’s largest vehicle exporter.

Customs data further showed that China’s exports of mobile phones and computers in September rose 124.9 per cent and 8.3 per cent, respectively, from the previous month.

Zhu said that after a meeting held by the Political Bureau of the Communist Party of China (CPC) Central Committee on July 24, a raft of policy measures to expand domestic demand, boost confidence, and prevent risks were introduced, which helped consolidate the good momentum of the economy.

“An array of measures such as fiscal and monetary policies, real estate policy relaxation, and those attracting foreign investment, were taken among a wide spectrum of areas in a relatively short period. These measures were strongly targeted and formed policy synergy,” Zhu added.

Looking into the fourth quarter, Zhu added sustained measures are needed to consolidate the recovery. “The key to maintaining the medium-high growth of the Chinese economy lies in high-quality development, innovation, and industrial upgrading. Industrial upgrading includes the upgrading of the manufacturing industry and also the upgrading of the service industry and improving consumption quality.”