PMI Photo: VCG

As 2024 approaches to the end,MKsport the vitality of China's economy is becoming increasingly evident. Recent economic indicators point to a tick-up in the country's economic performance in the fourth quarter.

The positive development trajectory is largely attributed to the cumulative effects of the government's stimulus policies, which lead to a steady restoration of market confidence.

Key economic indicators released for October offered encouraging signals. In October, the index of services sector grew by 6.3 percent year-on-year, up 1.2 percentage points from the previous month, while total goods imports and exports expanded by 4.6 percent in yuan terms, marking an acceleration of 3.9 percentage points from September.

Total retail sales of consumer goods edged up by 4.8 percent year-on-year, up by 1.6 percentage points. In the first 10 months of the year, infrastructure investment grew by 4.3 percent, a significant rebound compared to a year earlier.

In October, the manufacturing Purchasing Managers' Index (PMI) also returned to the expansion zone after five consecutive months staying below 50. The improvement across various indicators - production, demand, public expectations and more - is closely linked to effective macro-economic control measures.

In response to very complex external situation as well as facing rising internal challenges this year, the Chinese government moved to carry out a series of stimulus policies aimed at stabilizing economic growth.

A robust package of incremental policies has been introduced, beginning late September, focusing on countercyclical macroeconomic adjustments, expanding effective home demand, increasing support for all types of enterprises, stabilizing the real estate market, and boosting the capital market. These measures have significantly ratcheted up market confidence, and helped strengthen endogenous growth momentum.

Zhu Keli Photo: Courtesy of Zhu Keli

Specifically, the coordinated efforts of China's monetary and fiscal policies have provided substantial support for economic rebound in the fourth quarter.

On the monetary side, measures such as cuts to the reserve requirement ratio (RRR) and interest rates have lowered corporate financing costs and enhanced market liquidity. And, fiscal stimulus has directly improved corporate profitability and market vitality through tax cuts, fee reductions and increased government spending. The effects of the policies are evident in key indicators such as industrial value added and the services production index, signaling a comprehensive economic recovery.

It is important to note that the economic firming-up in the fourth quarter is not solely characterized by quantitative growth but also by qualitative improvement. With the optimization and upgrading of the industrial structure and a continuous enhancement of innovation capabilities, China's economy is gradually transitioning from a phase of rapid growth to one of high-quality development.

This transformation not only enhances economic sustainability and competitiveness, but also lays a solid foundation for future growth.

For instance, emerging industries such as high-tech manufacturing are expected to be the primary drivers of growth in the fourth quarter. These sectors, supported by latest technological innovations, are leading the optimization and upgrading of China's industrial structure. With ongoing technological breakthroughs and sustained market demand, the emerging high-tech industries are becoming new engines of economic growth.

And, improvements in the foreign trade landscape will help economic performance in the fourth quarter. Data shows that China's export growth has significantly accelerated entering the fourth quarter, benefiting from an improved global economic environment and enhanced export competitiveness.

Looking ahead, there is ample reason to believe that China's economic performance in the fourth quarter is likely to generate pleasant surprises. With the continued effectiveness of the pro-growth policies and the restoration of market confidence, China's economy is expected to maintain a relatively high growth rate in the coming months.

The country needs to be calm in face of the volatile international environment, as uncertainties, risks and challenges abound. It is essential to persistently advance high-quality opening-up and promote high-quality economic growth.

The article was compiled based on an interview with Zhu Keli, founding director of the China Institute of New Economy. [email protected]