Q3 GDP data and several key monthly indicators beat
consensus expectations, pointing to a firming of
growth and potentially indicative of past policy easing
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
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).