China's third-quarter growth exceeds forecast, buoyed by consumer spending and industrial production

China's third-quarter economic growth came in stronger than expected, boosting hopes that the world's second-largest economy will meet or even exceed Beijing's target for about 5% this year.

Economic activity has shown signs of stabilization in recent data. On Wednesday, September data for retail sales and industrial production also bested median forecasts, with the cumulative fixed asset investment print for the first nine months this year slightly below expectations.

China posted 4.9% growth in the July to September quarter from a year earlier, according to a release from China's National Bureau of Statistics on Wednesday.

That's stronger than economists expectations for third-quarter GDP of 4.6%, according to a Reuters poll. This follows the 6.3% print for the April-June quarter and 4.5% growth for the January-March quarter.

On a quarter-on-quarter basis, China's economy grew 1.3% in the third quarter, stronger than economists' expectations for a 0.9% growth. Second-quarter GDP growth was revised to 0.5%.

China also released monthly data Wednesday, reporting 4.5% growth in industrial production and 5.5% spike in retail sales in September from a year earlier — both slightly exceeding market expectations.

Fixed asset investment increased 3.1% in the first nine months of the year compared to the same cumulative period a year ago, slightly lower than the median forecast for 3.2% growth.

The country's property sector remains a drag on the economy, with property investment tumbling 9.1% in the January-to-September period from a year earlier.

Unemployment eased to 5% in September from 5.2% a month earlier.

"Overall, the national economy continued to recover in the first three quarters, and high-quality development was solidly advanced, laying a solid foundation to attain the annual development goals," China's National Bureau of Statistic said in a statement, according to a CNBC translation of the Chinese text.

"However, we must also note that the external environment is becoming more complex and severe, domestic demand is still insufficient, and the foundation for economic recovery still needs to be consolidated," the bureau added.

Along with monthly data released last week, the latest release further underscored what China's top leaders labeled as a "tortuous" post-Covid economic recovery.

China's consumer prices were flat in September, on the verge of deflation, while producer price index saw annual declines slow for a third month. September exports declined less than expected, though imports fell slightly worse than expected.

Aggregate financing — a broad measure of credit extended — climbed 9% in September, slightly more than expected. A bigger than expected decline in the value of new bank loans was offset by robust government bond issuance and shadow banking credit expansion.

Consumer sentiment has been dented by a festering debt crisis in the country's real estate sector. Country Garden is on the verge of defaulting on its $11 billion in overseas debt as it has yet to make a coupon payment due on Wednesday to its bond investors.