China’s economy grew more than expected over the summer, as the government offset some of the harm from a real estate crisis by pouring money into infrastructure construction projects, like building rail lines.
Data released on Wednesday showed that gross domestic product grew from July through September compared with the prior three months. Industrial production of everything from chemicals to steel began to stabilize as the government built more roads, sewage lines and other public works.
China’s economy, the world’s second largest, has struggled since the spring, as housing sales slowed and some of the biggest developers faced insolvency. The country’s debt load, which has surged in the past 15 years, continues to weigh on growth.
In the third quarter — from July through September — the economy grew 1.3 percent when compared with the three previous months. In the second quarter, the economy grew 0.8 percent.
When projected out for the entire year, the third-quarter data indicates that China’s economy was growing at about 5.3 percent, compared with an annual rate of a little over 3 percent in the second quarter.
“It seems tentative, but better than it was three months ago,” said Meg Rithmire, an associate professor at Harvard Business School who specializes in the Chinese economy.
Consumers, alarmed by the property crisis, have been wary of spending.
At the heart of the economy’s deeper problems is the real estate market: A two-year decline in home prices has left families feeling less prosperous, and less willing to spend money as a result. Weak demand for goods and services has left the economy teetering at the edge of deflation. Consumer prices were unchanged in September from a year earlier, and wholesale prices charged by producers actually fell, according to government data released on Friday.
Falling prices for apartments have triggered a wave of insolvencies among real estate developers and depressed construction — previously one of the country’s largest industries.
According to the Beike Research Institute in Tianjin, average prices for existing homes across 100 Chinese cities are now down 16 percent since August 2021.
The government has tried to offset the slowdown.
Officials in Beijing have given local governments a green light to issue more bonds to pay for infrastructure projects. The state-controlled banking system has been pumping out loans to manufacturers so they can invest in more factories.
The goal has been to create jobs, with the hope that people will then spend more money. Unemployment has been high among young people this year.
The lending is starting to help companies like Dalian Bingshan Group, a large manufacturer of commercial heating and cooling systems in the city of Dalian. “At Bingshan, we get a lot of government support — financing support, policy support,” said Ji Zhijian, the group’s chairman.
China’s top leader, Xi Jinping, has cracked down over the last several years on private-sector companies in fields ranging from internet platforms to home tutoring. But he has shown hints of softening in recent days as the economy continues to struggle, remarking on Friday, during a visit to Jiangxi Province, that he wanted to “promote the healthy development of the private economy.”
The pandemic casts a long shadow.
The main G.D.P. number reported by the government on Wednesday, which compared this summer with the same period last year, showed growth of 4.9 percent.
But a year ago, China’s economy was still struggling with “zero Covid” restrictions that included municipal lockdowns, mass quarantines and severe limits on travel between provinces.
“It’s not fair to compare the economy now to the economy a year ago, when many in China were stuck in their homes, and that comparison also tells you little about where the economy is headed now,” said Diana Choyleva, the chief economist at Enodo Economics, a London research firm that focuses on China.
China’s factories are still busy.
Even as China’s growth has slowed, its factories continue to produce a torrent of goods. And with domestic growth slowing, and consumers at home wary of making big purchases, China is finding big markets overseas.
China is flooding the world with exported cars, electric ones as well as gasoline-powered models.
Much of the merchandise is going to Europe. Before the pandemic, shipping statistics show, China exported 2.7 containers of goods to Europe for each container it imported. In recent months, China has been exporting almost four containers of goods for each container of imports.
But China’s export surge is generating political heat. European officials are concerned about the trade imbalance. And the European Union has already begun an anti-subsidy investigation into China’s fast-growing exports of electric cars, which could lead to tariffs next summer.
