China's economic growth continues to impress

Feng Li/Getty Images

Chinese economic growth met expectations during the September quarter, maintaining the familiar pattern seen in each of the past ten GDP reports.

According to the National Bureau of Statistics (NBS), GDP grew by 6.8% in the third quarter, down slightly on the 6.9% pace seen in the year to June.

The result was in line with economist expectations.

Over the quarter, GDP grew by 1.7% in seasonally adjusted terms, down fractionally on the upwardly-revised 1.8% pace seen in the June quarter.

That result too was in line with expectations.

“The national economy grew steadily with continuously optimising structure, rapidly growing new driving forces and remarkably improving quality and efficiency, sustaining the momentum of stable and sound development,” the NBS said following the release of the report.

“However, we must be aware that international conditions remain complicated and volatile and the national economy is still at a crucial stage of restructuring with the foundation for sound development yet to be consolidated.”

By sector, the bureau said that tertiary industries, dominated by services firms, grew by 7.8% from a year earlier. Growth in secondary industries, largely reflecting the performance of China’s industrial sector, stood at 6.3%. Value add for primary industries grew by a smaller 3.7%.

Alongside the GDP report, the NBS also released annual growth figures for retail sales, industrial output and urban fixed asset investment, with all bar the latter topping expectations.

Retail sales grew by 10.3% from a year earlier, above the 10.1% level of August and marginally above forecasts for an increase of 10.2%.

So far this year, total retail sales rose to 26.3 trillion yuan, up 10.4% on the same period in 2016. Online retail sales grew even faster, lifting 34.2% to 4.9 trillion yuan over the same period.

Industrial output also rebounded, growing by 6.6% from 12 months earlier. That easily breezed past expectations for a smaller gain of 6.2%, and was a noticeably stronger than the 6% level of August.

Output across the mining sector fell 1.6%, offset by strength in manufacturing and electricity, heat, gas and water output which rose by 7.3% and 8.4% respectively.

The NBS lavished praise on the success of cutting overcapacity across the nation’s mining and industrial sectors.

“The work of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs and strengthening areas of weakness went on smoothly,” the NBS said.

“The industrial capacity utilisation rate in the first three quarters reached 76.6%, 3.5 percentage points higher than the same period last year.”

Revealing the benefits of reducing overcapacity, it said that industrial profits at large enterprises rose to 4.9 trillion yuan between January to August, up 21.6% from the same period in 2016.

While retail sales and industrial output impressed, the only report to disappoint was urban fixed asset investment which grew by 7.5% between January to September compared to same period a year earlier.

Markets had been expecting an increase of 7.7% following growth of 7.8% in the first eight months of the year.

The NBS said investment by the government grew by 11% year-on-year between January to September, outpacing that from the private sector which grew by a smaller 6%.

The private sector accounted for 60.5% of total investment over the first nine months of the year.

Total real estate investment stood at 8.06 trillion yuan for the year, up 8.1% on the same period in 2016.

Despite the strong overall report card on the health of the economy, financial markets have weakened modestly in the wake of the GDP release, perhaps reflecting disappointment that the GDP growth rate was not even quicker.

As a whole, the movements have been modest in scale, continuing the pattern seen around most Chinese economic data points of late.

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