Foundation for recovery needs consolidating

The economic data the National Bureau of Statistics released on Wednesday show that the recovery of the Chinese economy continued in October.

The total retail sales of consumer goods increased by 7.6 percent in October year-on-year, 2.1 percentage points higher than the previous month. In the first three quarters of this year, the contribution rate of consumption expenditure to economic growth reached 83.2 percent, 6 percentage points higher than that of the first half of the year.

Industrial production in October increased by 4.6 percent year-on-year, 0.1 percentage points faster than the previous month, and the year-on-year growth rate of industrial enterprises above designated size has turned positive for two consecutive months, surging 11.9 percent in September.

In October, the value added of the equipment manufacturing industry above designated size increased by 6.2 percent year-on-year, accelerating for three consecutive months, and its contribution rate to the value added of all industrial enterprises above designated size reached 45.1 percent. That is also reflected in the export product structure, as China's economic structure is changing to a more solid and more competitive direction. It can be seen that the momentum of sustained recovery is relatively strong.

Although some of the data in October are not as good as expected, that is mainly due to some short-term seasonal factors.

The biggest impact on the recovery is the real estate industry. Data show that, from January to October, the real estate development investment fell by 9.3 percent year-on-year, which is 0.2 percentage points faster than that from January to September. It is necessary to deploy more plans to increase investment in real estate as soon as possible to consolidate the foundation for a stronger recovery in the future.

The central government has announced the issuance of an additional 1 trillion yuan ($137.8 billion) of government bonds for post-disaster recovery and reconstruction and urban drainage and flood prevention projects. These measures will add new impetus to infrastructure investment. In addition, the central authorities have also proposed to accelerate the construction of government-subsidized and affordable housing, urban and village renovation and infrastructure. As the plans in these fields are expected to be implemented in 2024, they will help hedge the pressure brought by the slowdown in real estate investment in the country.

The quality of economic growth is improving, and the growth rate is in a rational range. Despite this, the country must recognize that the constraints of insufficient domestic demand are still prominent, external pressure is still relatively large, and risks such as those related to the real estate market and local government debt are still not yet resolved. This means the policymakers must continue to be cautious and expand demand, boost confidence, and prevent risks in the remainder of the year and beyond.

-21 Century Business Herald