Q3 GDP Beat Masks Underlying Fragility

China's Q3 GDP beat, +3.9% q/q versus +2.8% q/q expected, doesn't suggest the economy is on a solid footing yet. The NBS stated just as much post the release. IP in September was much firmer than expected, +6.3% y/y, against +4.8% y/y forecast. This sector continues to recover, although retail sales fell back, +2.5% y/y, versus +5.4% y/y last month and +3.0% expected.

• This is still likely to leave the bias towards easier policy settings to support the property/consumer segments of the economy.
• Softer retail spending reflected lower spending in discretionary (outdoor dining) and the property related categories.
• Property investment remained weaker, down -8.0% YTD y/y, against -7.5% expected. This dragged the overall fixed asset investment result to 5.9% YTD y/y, slightly below the 6.0% forecast.
• Unemployment was higher than forecast 5.5%, versus 5.2% forecast. Youth unemployment will remain an area of concern (17.9% for 16-24 yr olds).
• The trade side remained resilient, exports +5.7% (4.0% forecast), imports 0.3% (against 0.0% forecast). The trade surplus remained healthy at $84.74bn as well, also above forecasts.
• Commodity imports were up in volumes terms for coal (12.19%) and iron ore (+3.6%), but still lower in y/y terms. Oil import volumes were down a touch.