- Due to the global epidemic, the uncertainty of the future is still quite high.
- China’s industrial output in September increased by 6.9% over the same period last year, and retail sales increased by 3.3%.
- China's retail spending lags behind the recovery of factory activities, mainly because of the severe unemployment rate brought about by the epidemic
China announced its third-quarter GDP data on Monday. From July to September, China’s GDP grew by 4.9% this year, higher than the 3.2% in the second quarter. Various data are expected to show that China’s economic recovery has accelerated in the third quarter, and is currently the only major economy in the world with positive growth.
However, due to the global epidemic, the uncertainty of the future is still quite high. The National Bureau of Statistics held a press conference on the operation of the national economy at 10 AM local time today.
Besides third quarter GDP data, statistical information released included industrial added value in September, investment growth in national assets, and total retail sales of consumer goods.
China’s industrial output in September increased by 6.9% over the same period last year, and retail sales increased by 3.3%. The fixed asset investment rate in the first nine months also increased by 0.8% over last year, both higher than expected.
Reuters reported that many governments around the world hope that China’s strong recovery can help their economies restart demand. Many countries are still in heavy lockdowns and a second wave of new coronavirus infections.
Capital Economics analysts told Reuters, “as China quickly contained the new coronavirus pneumonia and launched effective economic stimulus measures, China has become the first major economy to return to growth before the virus outbreak.”
However, they also warned that after the stimulus measures are over, China’s economic growth may slow down again by the end of 2021.
“I don’t think the headline number is bad,” said Iris Pang, chief China economist for ING in Hong Kong. “Job creation in China is quite stable which creates more consumption.”
Before the third quarter, China’s retail spending lagged behind the recovery of factory activities, mainly because of the severe unemployment rate brought about by the epidemic, and the continued public concern about infection. This made consumers choose to stay at home after reopening.
However, this situation changed in the third quarter. Consumers in shopping malls have increased, and some of China’s major trading partners have gradually lifted lockdowns, getting rid of China’s record downturn earlier this year.
Chinese Government Measures Worked
Since the epidemic, Beijing has introduced a series of measures, including increasing fiscal expenditures, tax relief, lowering loan interest rates and bank reserve requirements, to revive the virus-affected economy and support employment.
Many analysts surveyed by Reuters expect that industrial output in September will increase by 5.8% over the same period last year, which is faster than the 5.6% growth in August. Retail sales are considered to have increased by 1.8%, compared with a 0.5% increase in August.
“China’s economy remains on the recovery path, driven by a rebound in exports,” said Yoshikiyo Shimamine, chief economist at the Dai-Ichi Life Research Institute in Tokyo. “But we cannot say it has completely shaken off the drag caused by the coronavirus.”
The International Monetary Fund predicts that China will expand by 1.9% throughout the year and is the only major economy that is expected to report growth in 2020.