China tipped for 5.5% growth in Q4

SHANGHAI -- Major economic activity data continued to improve in China in October, with ANZ Bank saying the figures reinforce its belief that China's GDP will expand above 5.5% y/y in Q4. "Consumption growth is particularly encouraging," ANZ says.

"Aside from the headline figures, retail sales (excluding car sales) rose 3.6% y/y in October, improving from 2.4% in September. Durable goods, including home appliances and furniture, also turned positive, partly due to pent-up demand.

"The tertiary sector also extended the positive momentum, evidenced by higher FAI growth in the sector (9.9% y/y vs 7.8% prior).

ANZ said an upside surprise in property investment in October was unlikely to be sustained going forward. Property investment growth edged up to 12.2% y/y in October from 11.9% prior, exceeding expectations.

The bank believes that, as the negative output gap continues to narrow, China's policy measures will continue to focus on reforms and risk control instead of stimulation. Recent bond defaults among State-owned enterprises (SOEs) had triggered aggressive liquidity injections from the central bank, the People's Bank of China.

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