China showed ‘significant’ Q3 rebound but faces challenges-state planner

Reuters

16:25 JST, October 17, 2022

BEIJING (Reuters) – China’s economy showed a significant rebound in the third quarter and employment was largely stable, a senior official at the state planner said on Monday, even as the economy still faces challenges and difficulties.

Policymakers have rolled a flurry of measures to bolster the world’s second-largest economy, which narrowly escaped a contraction in the second quarter, as stringent COVID curbs and a deepening property slump weigh on the outlook.

“The economy picked up significantly in the third quarter,” Zhao Chenxin, deputy head of the National Development and Reform Commission, told a news conference during the once-in-every-five-years Communist Party Congress.

“Consumer prices have risen modestly, in sharp contrast to the high global inflation, and the employment remained generally stable.”

Investors are nervously awaiting third-quarter Chinese GDP data due on Tuesday, especially after trade figures due to be released on Friday were unexpectedly delayed.

China’s economy likely grew 3.4% in July-September from a year earlier, gaining pace from the 0.4% growth in the second quarter, but the expected 2022 growth could still be one of the weakest in almost half of a century, a Reuters poll showed.

Policymakers have rolled out over 50 economic support measures since late May, channeling more money into infrastructure projects and cutting taxes for businesses.

The recovery will be consolidated as the effects of macro policies continue to be released, said Zhao, who conceded the economy still faces multiple headwinds.

“Influenced by changes in the external and internal environment, there are still some outstanding contradictions and problems in the economic operation, and economic development still faces many difficulties and challenges,” he said.

Amid weak consumer and business confidence, firms are wary of expanding and hiring more workers. The nationwide survey-based jobless rate eased slightly to 5.3% in August from 5.4% in July. Youth unemployment stayed high at 18.7%, after reaching a record 19.9% in July.

President Xi Jinping touted the fight against COVID-19 as he kicked off the party congress by focusing on security and reiterating policy priorities on Sunday, suggesting strict COVID restrictions will not ease anytime soon.

China will take steps to stabilize its supply chains and ramp up policies to attract foreign investment, particularly in the manufacturing sector, Zhao added.

Other senior government officials vowed at the news conference to greatly increase domestic energy supply capacity and further increase reserve capacity for key commodities.