Key Takeaways 

  • Q3 GDP data and several key monthly indicators beat

    consensus expectations, pointing to a firming of

    growth and potentially indicative of past policy easing

    gaining traction.

  • Revisions to the GDP back data make it exceptionally

    easy for the authorities to hit their 5% growth target for


  • We have revised our 2023 forecast up to 5.4%

    (+0.5ppts) to reflect the stronger-than-expected Q3

    growth rate (1.3% quarter over quarter) and slightly

    better monthly data prints.

  • Our China Activity Indicator (CAI) broadly supports the

    assertion that activity has found a more stable footing

    over the past three months, helped by recent

    improvements in some aspects of the property market

    and a further normalisation in household savings.

  • That said, the economy is not out of the woods. The

    real estate adjustment will still weigh on growth beyond

    this year.

  • Our latest estimate suggests that the plethora of

    incremental policy loosening continues to keep

    financial conditions in a moderately accommodative


  • One downside of the recent stabilisation is that there

    is some risk that it reduces the impetus for the

    authorities to loosen policy further.

  • As a result, we remain cautious about the outlook for

    2024 and beyond: our latest 2024 forecast has been

    revised up only modestly (4.2%, +0.2ppts).


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