China's economic growth accelerated to 4.5% in the third quarter compared to the same period last year, which is a slight improvement over the 4.4% forecast by economists and a recovery from a three-year low of 4.3% in the previous quarter. The growth rate for the first nine months of the year averaged 4.6%, aligning with Beijing's target range of 4.5% to 5%.
However, the economy continues to face significant challenges, including a 7.2% decline in fixed asset investment in urban areas and sluggish consumer demand, as evidenced by only a 1.1% increase in retail sales in September, which was better than the expected 0.6%. Industrial output matched forecasts with a 5.5% increase. The urban unemployment rate remained at 5.2%.
The Chinese government has been heavily relying on exports for growth, but this strategy is under pressure due to cooling investments in AI sectors and escalating trade tensions with the European Union. In response, authorities have implemented various policy measures, including targeted rate cuts and mortgage subsidies, and allocated 550 billion yuan in unused debt quotas to local governments.
Economists predict that the People's Bank of China will maintain benchmark lending rates through the end of the year, relying on fiscal measures to stimulate the economy