Fri, 01 Dec 2023

BEIJING, China: In October, China's industrial output and retail sales growth exceeded expectations.

However, significant weaknesses, most notably the crisis-hit property sector, local government debt risks, slow global growth and geopolitical tensions, are continuing to stifle the revival of world's second-largest economy, which has struggled to mount a strong post-COVID recovery.

A series of policy support measures have only offered modest benefits, increasing pressure on Chinese authorities to provide more stimulus.

Data from the National Bureau of Statistics (NBS) released this week showed that in October, China's industrial output grew 4.6 percent year-on-year, more than the 4.5 percent rate in September, and beating expectations for a 4.4 percent increase in a Reuters poll.

It was also the strongest growth rate seen since April.

However, analysts remained cautious, noting that the Chinese property sector remains a weak link for the economy and noting the lack of major reforms, which could restrict sustainable long-term economic growth.

Xing Zhaopeng, senior China strategist at ANZ, said, "Due to the impact of holidays and low base effect in 2022, year-on-year figures cannot reflect the actual momentum of the economy."

Month-on-month statistics suggest that China's economic momentum has been further weakened by "increasing deflationary risks," he added.

Louise Loo, China economist at Oxford Economics, said, "Prolonged weakness in external demand could hamper industrial production despite strengthening last month as de-stocking pressures eased further."

During the eight-day Golden Week holiday earlier in October, spending did not significantly increase and trips made in that period missed government estimates. Economists said that in an uncertain employment market, consumers are concerned about their jobs and income growth.

China has been intensifying its efforts to revive its post-COVID economy through launching a series of policy support measures in recent months, but the positive effects have been so far been marginal.

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