November 15, 2023

China’s Economy at a Glance – November 2023

Bond-fuelled lending to support near-term growth but challenges remain unaddressed


  • There was little in this month’s data to change our overall view of China’s economy. Rapid expansion in government bond issuance in recent months should ensure that China meets (and likely exceeds) its growth target for the year, but not address fundamental constraints around household consumption and the real estate sector. Our forecasts for China’s economic growth are unchanged – with 2023 growth at 5.2%, 2024 at 4.5% and 2025 and 4.8%.
  • Growth in China’s industrial production edged up in October, increasing by 4.6% yoy, compared with 4.5% yoy in both August and September. We continue to note that these rates of increase are relatively modest compared with pre-pandemic rates.
  • China’s real fixed asset investment grew more slowly in October – increasing by 1.8% yoy in October (down from 2.9% yoy previously). There remains a sizeable disparity between growth in nominal investment by state-owned enterprises (SOEs) and private sector firms. SOE investment rose by 3.1% yoy in October – its slowest rate of expansion since December 2021 – while private sector investment edged up by 0.1% yoy.
  • China’s trade surplus was somewhat narrower in October – totalling US$56.5 billion (down from US$77.8 billion in September) – with this outcome reflecting an easing in export values. Prices remain a key influence on both import and export values.
  • Real retail sales grew by 7.8% yoy (also up from 5.5% yoy previously). The extreme volatility of sales data during the COVID-19 pandemic makes it difficult to interpret the direction of these trends; the pickup may reflect the impact of the Golden Week holidays at the start of the month – which were negatively impacted in 2022 by COVID-19 restrictions – resulting in a boost from base effects.
  • The People’s Bank of China (PBoC) left its medium term lending facility (MLF) rate unchanged in November. The MLF is the basis for bids from commercial banks used to determine the Loan Prime Rate (China’s primary policy rate). That said, the PBoC provided additional funding to financial markets, over and above the MLF loans that were expiring this month to expand liquidity. At a high level, we don’t view this as being particularly significant – there was no shortage of funds available for lending, rather demand for loans (particularly in the real estate sector and among private firms more generally) has been weak, and this move will do nothing to address this.

For further details, please see China’s economy at a glance (November 2023)