The Chinese economy grew 4.9% for the quarter from July-to-September compared with the same period last year, according to official government statistics.

The sharp uptick was short of the 5.2% growth for the quarter expected by analysts, according to a poll by Refinitiv.

“China’s economy continued its rapid rebound last quarter, with the recovery broadening out and becoming less reliant on investment-led stimulus,” Julian Evans-Pritchard, senior China economist for Capital Economics, said in a research note.

The Chinese economy, the second-largest in the world, grew 3.2% in the second quarter after shrinking 6.8% in the first quarter of 2020 as the country was ravaged by the coronavirus. The last time China reported an economic contraction had been 1976 following the death of Mao Zedong.

Yi Gang, Governor of the People’s Bank of China, said he expects the country’s economy to grow about 2% this year.

“The Chinese economy remains resilient with great potential. Continued recovery is anticipated, which will benefit the global recovery,” Yi said.

Analysts said the recovery in consumer spending was encouraging. Retail sales increased .9% year-over-year for the third quarter. In a press conference, a spokesperson for the National Bureau of Statistics said more people are “willing to come out from their homes and spend money in the physical shops” as the pandemic has been brought under control.

Nomura analysts said the central bank was unlikely to intervene with major policy changes in the immediate future as it gauged the recovery and dealt with external trade pressure.

“Beijing’s new master plan that focuses more on ‘internal circulation’… is becoming increasingly evident,” they wrote in a research note.

China’s GDP grew a cumulative 0.7% through the first nine months of the year.

“For China to prosper in a durable way, I think one of the key issues really is going to be not just pumping … credit, but getting credit into the hands of the small and medium enterprises, the more dynamic parts of the economy that can generate better employment growth, as well as productivity growth because ultimately, that is crucial for China’s growth that matters a great deal for economies in the region as well,” Eswar Prasad, a professor of trade policy at Cornell University, said.

Prasad said the latest GDP numbers were “stunning.”

Nicolas Asfouri/AFP via Getty Images

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