China's gross domestic product (GDP) rose 4,9 percent in the third quarter from a year earlier, data showed in Beijing on Monday. That was lower than economists had forecast but faster than the 3,2 percent expansion seen in the second quarter. Retail sales expanded 3,3 percent in September, industrial output grew 6,9 percent in the month and investment growth accelerated to 0.8 percent in the nine months to the end of the quarter.
Despite weaker than expected GDP performance, Output has expanded 0.7 percent so far this year, meaning the world's second-largest economy has recovered all the ground it lost in the first half of the year during the coronavirus (COVID-19) epidemic.
Underpinning the recovery has been an aggressive containment of the deadly coronavirus that has allowed factories to reopen quickly and capitalize on the global rush of medical equipment and work-from-home technology, a dynamic that helped exporters gain record market share in the seven months through July.
Shoppers have been more cautious, but heavy spending during the recent Golden Week holiday suggests they, too, are starting to open their wallets again.
The recovery has occurred with relatively restrained government borrowing and central bank easing compared with its Chinese peers. Instead, the government has focused on specific support for companies, in contrast to the way it responded to the global financial crisis.
Support policies
“China is supporting the world in a different way than it did after 2008,” said Shen Jianguang, chief economist at e-commerce giant JD.com. “A slowing economy means it could not afford another stimulus in 2020. Instead, it did its job by serving as the ‘provider of last resort.’”
Central bank Governor Yi Gang said on Sunday that China has a “proactive fiscal policy” and “accommodative monetary policy to support the economy.”
“At this point, China has basically brought COVID-19 under control,” Yi said at a webinar hosted by the Group of 30. “Overall, the Chinese economy remains resilient with great potential. A continued recovery is anticipated, which will benefit the global economy.”
growing share
Analysis of data from the International Monetary Fund (IMF) shows that the share of global growth coming from China is expected to rise from 26.8 percent in 2021 to 27.7 percent in 2025, according to Bloomberg calculations.
The IMF says Chinese growth is virtually the only reason it expects global output to be 0.6 percent higher by the end of 2021 compared with the end of 2019.
But the recovery is not without holes. The economy was just 0.7 percent larger in the nine months to September than in the same period in 2019. At the start of the year, the government had expected annual growth of around six percent.
And consumers have been slow to spend like they used to. Even with the virus under control, shoppers have spent about nine percent less in the first eight months of the year compared with the same period last year.
It is also unclear how durable the recovery will prove given domestic pressures from unemployment and rising corporate and household debt. China Evergrande Group, the world's most indebted developer, has unsettled investors amid fears over its financial health.
Much will also depend on how relations with the United States evolve after the presidential election in November. Any worsening of trade frictions could be an obstacle to the revival of exports. At the same time, the resurgence of the virus in Europe and the United States will complicate the global recovery and could harm China's own recovery.
Getting the economy back on track quickly is crucial to China’s global ambitions. Last week, during a tour of the tech hub of Shenzhen, President Xi Jinping doubled down on calls to take global leadership in technology and other strategic industries.
Urging an “unwavering” commitment to technological innovation in a period of “changes unseen in a century,” Xi again promoted the need to be more self-reliant, a policy expected to be a central part of a new five-year economic plan to be discussed at a Communist Party meeting expected later this month.
That focus on driving growth in new-economy sectors such as consumption, technology and services means investment is outpacing that in older sectors, making this cycle different from the post-2008 credit and construction boom, said Cui Li, head of macro research at CCB International Holdings in Hong Kong.
“An industrial cycle led by economic improvement and the absence of a major credit expansion will make this recovery in growth more sustainable,” he said. “The Chinese recovery will continue.”
Source: Bloomberg/EyN
Aduana News is the first Argentine customs newspaper to launch its digital version. With 20 years of experience, its publications and initiatives aim to provide the most relevant knowledge on customs issues in order to contribute to safe trade in the region.
