The better-than-expected figures show the world's second-largest economy is gaining some steam, after narrowly escaping a contraction in the June quarter and lifting recovery prospects marginally for the rest of the year.
Although the upbeat data lifts some of the gloom hanging over the sluggish recovery, which had been clouded by weak trade data and slow credit growth, Evans-Pritchard does not expect the strength to sustain into September."And while the current virus wave may have peaked, activity is set to remain weak over the coming months amid the deepening property downturn, softening exports and recurring COVID-19 disruptions," he said.
"Since the start of this year, the situation facing economic development has become more complex and severe than that in 2020," NBS spokesperson Fu Linghui said, citing the risk of a global downturn and challenges around China's COVID controls. However, he said recent policy support was having some effect.
Once a key driver of economic growth, China's property market has lurched from crisis to crisis since mid-2020 after regulators stepped in to cut developers' excess leverage. Policymakers have announced over 50 economic support measures since late May and stressed this quarter was a critical time for policy action.Complicating the case for looser monetary support, however, are rapid declines in the yuan against the U.S. dollar, which has worried policymakers.
Easing could instead come through liquidity measures and support for manufacturing and green investment.Others expect a cut in the benchmark loan prime rate, after China's large banks lowered deposit rates, which could ease pressure on margins.To spur growth, authorities have dusted off an old playbook, issuing debt to fund big public works projects. Infrastructure investment rose 8.3% in the first eight months from a year earlier, quickening from 7.4% in Jan-July, Friday's data showed.