China Economic Quarterly Q3 2021

China’s GDP growth slowed to 4.9% in Q3, but still grew by 9.8% in the first three quarters, as the lingering pandemic exerts downward pressure.

This issue provides an overview of the macroeconomic trends in Q3 2021, some policy updates and hot topic analysis.

Highlights

Here are some macro-economic highlights:

GDP growth slowed to 4.9% in Q3 but still grew by 9.8% in the first three quarters
Total fixed asset investment increased by 7.3% in the first three quarters
Total real estate investment went up by 8.8% to reach 11.26 trillion yuan
PMI dropped to around 50% in Q3 and was less than 50% in September
Growth of industrial added values increased by 11.8% in the first three quarters
Total retail sales of consumer goods went up by 16.4%
Imports and exports increased by 22.7% to reach 28.33 trillion yuan
PPI rose by 10.7% in September and CPI increased by 0.7%

Policy updates

Growth of aggregate financing to the real economy reduced by 4.87 trillion yuan
China’s monetary policy almost recovered to the pre-pandemic level. According to the People’s Bank of China (PBoC), total aggregate financing to the real economy (AFRE) increased by 24.75 trillion yuan in the first three quarters which is 4.87 trillion yuan less than the same period in 2020 but 4.14 trillion yuan more than the same period in 2019.

Fiscal revenue grew by 16.3% while spending increased by 2.3%
In the first three quarters, fiscal revenue restored generally stable growth as economic recovery continues. The national public budget revenue grew by 16.3% year-on-year to 16.40 trillion yuan, an increase of 8.9% compared to the same period in 2019.

Hot topic analysis: The progress of China’s innovative economy

China’s global ranking has risen to 12th this year, according to the Global Innovation Index (GII) 2021 released earlier in September by the World Intellectual Property Organisation (WIPO). As the world’s largest developing country and second largest economy, China has made continuous progress towards building an innovative economy. In another word, China is becoming an innovative country and growing from a big country in science and technology to a powerful nation.

Implications and opportunities

Substantial enhancement of economic strength is fundamental to the development of innovative economy
The industrial sector continues to move towards medium and high-end of the global value chain, where innovation is key to maintain sustainable growth
China’s strength in science and technology has developed by leaps and bounds, providing the backbone for an innovative economy
China’s R&D investment intensity reached 2.4% of total GDP in 2020, compared to nearly 2.5% in OECD countries
China’s innovation index continued to improve and enterprises kept the dominant position for R&D investment
Enterprises will continue to play a leading role while China strives to become a major world centre for science and innovation

Find out more about hot topic analysis