International investment banks have raised their forecasts for China's GDP growth in 2023 to above 5 percent after third-quarter growth figures pointed to signs of stabilization, indicating that the nation's economic performance will likely be in line with the official target.

Nevertheless, political advisers and experts said it is too early to pull back on stimulus measures, as the property market's recovery remains nascent, and consumer spending could weaken further if pent-up demand fades, which in turn could reignite downside risks amid lingering external uncertainties.

They said policy steps that are likely to be taken for the rest of the year to consolidate the recovery may include cuts in interest rates and banks' reserve requirement ratios, further property market easing and more forceful measures to vitalize the capital market, after the country's top legislature recently adopted additional treasury bond issuances worth 1 trillion yuan ($136.7 billion).

Morgan Stanley, JPMorgan, UBS and Nomura, among other international financial institutions, have revised upward their forecasts for China's full-year GDP growth, after the country reported better-than-expected GDP growth of 4.9 percent year-on-year in the third quarter, with retail sales and manufacturing investment accelerating in September.

Reflecting on the third-quarter performance, Morgan Stanley said in a report that it now expects China's economy to grow 5.1 percent this year in real terms, up from a previous estimate of 4.8 to 4.9 percent, and approximating the government's target of around 5 percent.

Similarly, UBS raised its forecast from 4.8 percent to 5.2 percent. Wang Tao, chief China economist at UBS Investment Bank, said the country's fourth-quarter growth may accelerate to 5 percent year-on-year, thanks to the continued recovery in consumption and stabilization of property transactions.

"China's economy has recently been showing signs of stabilization, as evidenced by the raft of headline data, including trade, credit and electricity consumption," said Lu Ting, chief China economist at Nomura.

However, Lu said that the stabilization is not yet broadly based, with a risk of an economic slowdown at the end of the year or early 2024.

Pent-up demand for travel and social gatherings may fade now that the Mid-Autumn Festival and National Day holiday period is over, and the property sector has yet to see a full-blown recovery, he added.

Narrowing by 2 percentage points from August, the total area of commercial property transactions in September declined by 10.2 percent year-on-year, said the National Bureau of Statistics.

Gong Liutang, a member of the 14th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body, said total fixed-asset investment may slightly speed up in the fourth quarter amid ramped-up infrastructure investment, but property development investment and private investment are likely to continue contracting.

Also, China's exports may still feel some pressure as many overseas central banks may keep interest rates elevated for a longer period of time amid intensified uncertainties over global energy prices, said Gong, who is also a professor of applied economics at Peking University's Guanghua School of Management.

Gong said it is sensible for China to further ease property market administrative restrictions in first-tier cities and reduce benchmark interest rates, which will lessen financing costs for enterprises — a drag on industrial profits and investment returns — and thus boost their willingness to expand investment and employment.

Pan Gongsheng, governor of the People's Bank of China, the country's central bank, pledged efforts to encourage financial institutions to further reduce real lending interest rates, while delivering a report on Saturday to the Standing Committee of the National People's Congress, the country's top legislature.

Also highlighting policymakers' intentions to extend support to the economy, the NPC Standing Committee on Tuesday adopted a decision to issue 1 trillion yuan in special treasury bonds in the fourth quarter — proceeds of which will be mostly used to strengthen the country's capacity to deal with natural disasters.

Zhang Jun, chief economist at China Galaxy Securities, said accelerated bond issuances may necessitate a cut in the RRR — the proportion of money that lenders must keep as reserves — in the fourth quarter to keep ample liquidity in the banking system.