KPMG – China Economic Monitor, 4Q 2023

According to the KPMG China Economic Monitor, China's GDP grew by 4.9% year-on-year in the third quarter, a decrease from the 6.3% growth seen in the second quarter. This decline was primarily due to the higher base of comparison from the previous year. However, if we exclude this base effect, the average growth rate for the third quarter of 2022-23 was 4.4%, which is an increase of 1.1 percentage points from the previous quarter and has exceeded market expectations. Additionally, on a month-on-month basis, GDP in the third quarter increased by 1.3%, which is 0.8 percentage points higher than the second quarter. The domestic economy has also shown signs of continued recovery and improvement. In the first three quarters of the year, China's GDP increased by 5.2% year-on-year. This means that in order to achieve the expected annual growth target of 5%, the fourth quarter only needs to see a growth rate of 4.4%. With the implementation of steady growth policies and the lower base effect from the same period last year, it is anticipated that China will successfully reach its annual economic growth target as outlined in the Government Work Report. While the worst period of downward pressure on the economy has passed, the current economic recovery is still uneven and lacks strong momentum. It is crucial to consolidate the foundation of economic recovery and navigate the increasingly complex external environment. Looking ahead, macroeconomic policies are expected to provide increased support and unleash the potential of domestic demand in order to maintain steady economic growth. Furthermore, with the improvement of household income and policy support, consumption is expected to play an increasingly positive role in boosting the economy.