Growth of retail sales, a gauge of consumption, also beat expectations, rising 5.5 per cent last month, and accelerating from a 4.6 per cent increase in August. Analysts had expected retail sales to expand 4.9 per cent.
Fixed asset investment grew 3.1 per cent in the first nine months of 2023 from the same period a year earlier, versus expectations for a 3.2 per cent rise. It expanded by 3.2 per cent in the January to August period.
But a deepening downturn in the property sector, which accounts for nearly a quarter of economic output, poses a big challenge to policymakers as they seek to keep growth on track, analysts said.
The latest data underlined those worries. Property investment in the first nine months of 2023 fell by 9.1 per cent from a year earlier, after slumping 8.8 per cent from January to August. Fixed-asset investment by private firms fell 0.6 per cent from January to September year-on-year, highlighting weak private sector confidence.
The faltering property sector has hit some of the biggest developers in the country.
A grace period for a US$15 million coupon payment by Country Garden Holdings, China’s biggest private property developer, expired earlier in the day, fuelling fears that it had defaulted on its offshore debt.
“In the grand scheme of things, I don’t think individual developers running into further financial turbulence will be enough to derail things. The problems of the developers have been known to the market for some while now,” said Frederic Neumann, chief Asia economist and co-head of Global Research at HSBC.
All the same, efforts by policymakers to support big cities have failed to bolster confidence, underscoring the depth of the problems in the industry which slumped into a crisis two years ago.
“In the near-term, our expectations are still for a further round of 10bp rate cuts in Q4 from the PBOC, a step-up in the easing of homebuying restrictions, and modest increases in state-directed infrastructure spending,” said Louise Loo, China economist at Oxford Economics, in a note.
The International Monetary Fund on Wednesday downgraded its 2023 and 2024 growth forecasts for the Asian giant, saying the property slowdown could cause China’s GDP to decline.