China entered the fourth quarter on a stronger-than-expected footing, according to a flurry of data released over the weekend, with the world's number two economy appearing to defy expectations for a slowdown in the final quarter of the year.
The economic figures showed growth in industrial production, retail sales and fixed asset investment powering holding up in October. Meanwhile, export data published last Friday indicated a rebound in shipments in the same month.
"The recovery momentum is slightly stronger and more sustainable than what markets had expected, inflation is still not a threat, and the Street may need to slightly revise up their [fourth quarter] GDP [gross domestic product] growth forecasts," said Ting Lu, chief China economist at Bank of America Merrill Lynch.
"October macro data should be on the whole positive for market sentiment," he added.
China's economy, which grew by 7.8 percent in the third quarter, is expected to slow to around 7.5 percent in the final three months of the year as the impact of fiscal stimulus measures unveiled in July fades.
However, the acceleration in industrial production growth to 10.3 percent on-year – from 10.2 percent in the previous month and above expectations for a rise of 10 percent – poses an upside risk to fourth quarter growth forecasts, said economists.
"Industrial production growth...was against our and market expectations of a further moderation. The resilience reflects better-than-expected demand. (It) also suggests small upside risks to our fourth quarter GDP growth forecast of 7.5 percent and our full-year 7.6 percent forecast," said Jian Chang, China economist at Barclays.
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The data release came as top leaders of China's ruling Communist Party convened Saturday for a key meeting, known as the Third Plenum, to set the economic and political agenda for the next decade. The four-day meeting, which is cloaked in secrecy and held under tight security, will conclude on November 12.