China's economic recovery accelerates

China's economic recovery accelerates

This panoramic aerial photo, taken on Jan 10, 2023, shows a view of the Lujiazui area in the China Pilot Free Trade Zone in east China's Shanghai.

China's economic recovery is gaining speed as key indicators from consumption to production pick up, indicating that the country's pro-growth policies are taking effect.

The latest index to rise is the purchasing managers' index for China's manufacturing sector, which came in at 50.2 in September, bouncing back to expansion territory after four consecutive months of growth.

In August, China's major industrial firms surged 17.2 percent, up from a year earlier and representing the first increase since the second half of 2022, following a drop of 6.7 percent in July and an 8.3 percent drop in June.

In August, consumer prices returned to growth territory, and producer prices narrowed for a second consecutive month, pointing to an improved supply-demand balance.

The pickup came as a range of government measures were implemented on the ground, designed to support the private economy, invigorate the capital market and expand strategic emerging industries, said Wen Bin, chief economist at China Minsheng Bank.

Consumption is seen as a bright spot in the nation's economic performance. Data from the National Bureau of Statistics shows retail sales of consumer goods rose 4.6 percent year-on-year in August, following a 2.5 percent expansion in July.

The fervor for travel over the current eight-day Mid-Autumn Festival and National Day holiday proves China's strong consumer demand. Fliggy's travel platform, Alibaba's travel service, said that orders for domestic trips during the holidays surged nearly 600 percent year-on-year, and overseas trips skyrocketed more than 2,000 percent.

Cumulative hotel bookings in Beijing, Shanghai, Foshan and other major cities during the holidays have surged about 500 percent from last year, Fliggy said.

Chen Li, the chief economist at Chuancai Securities, expects the consumption market to pick up at a faster clip in the fourth quarter of the year, partly fueled by the Mid-Autumn Festival and National Day holiday, as well as the upcoming online shopping festival.

Analysts say the property sector, a pillar of the nation's economy that has been a drag on economic recovery, will also embrace a notable recovery over the rest of the year, thanks to government support.

China has adjusted its policies to maintain the robust development of the property sector, including adjustments to ease restrictions on the classification of first-home buyers, lower existing first-home loan rates and extend tax incentives. Observers say these changes have been instrumental in restoring confidence, enhancing market expectations and promoting economic recovery.

China's growth outlook is upbeat for the rest of the year.

On the back of policy tailwinds, the real estate market has become brisker. In September, the total sales of the country's top 100 real estate developers surged 24.8 percent month-on-month, according to a report released by the China Index Academy property research institution.

The recovery momentum will be pursued in the fourth quarter, experts say, with consumption and real estate being the most notable sectors in this regard.

Wen said the economic growth in the third and fourth quarters would remain within a reasonable and prudent range.