China’s shaky economic recovery from the coronavirus pandemic is gaining strength as consumers return to shopping malls and auto dealerships while the United States and Europe endure painful contractions.
Growth in the world’s second-largest economy accelerated to 4.9 per cent over a year earlier in the three months ending in September, up from the previous quarter’s 3.2 per cent, official data showed Monday. Retail spending rebounded to above pre-virus levels for the first time and factory output rose, boosted by demand for exports of masks and other medical supplies.
Growth ‘still accelerating’
China is the only major economy that is expected to grow this year while activity in the United States, Europe and Japan shrinks.
The recovery is “broadening out and becoming less reliant” on government stimulus, Julian Evans-Pritchard of Capital Economics said in a report. He said growth is “still accelerating” heading into the present quarter.
Most Asian stock markets rose on the news of increased activity in China, the biggest trading partner for all of its neighbours. Japan’s Nikkei 225 index added 1.1 per cent while Hong Kong’s Hang Seng climbed 0.9 per cent. Markets in South Korea and Australia also rose.
China’s benchmark Shanghai Composite Index lost 0.7 per cent on expectations the relatively strong data will reduce the likelihood of additional stimulus that might boost share prices.
Warning on international economy
China, where the pandemic began in December, became the first major economy to return to growth after the ruling Communist Party declared the disease under control in March and began reopening factories, shops and offices.
The economy contracted by 6.8 per cent in the first quarter, its worst performance since at least the mid-1960s, before rebounding.
The economy “continued the steady recovery,” the National Bureau of Statistics said in a report. However, it warned, “the international environment is still complicated and severe.” It said China faces great pressure to prevent a resurgence of the virus.
Authorities have lifted curbs on travel and business but visitors to government and other public buildings still are checked for the virus’s telltale fever. Travellers arriving from abroad must be quarantined for two weeks.
Last week, more than 10 million people were tested for the virus in the eastern port of Qingdao after 12 cases were found there. That broke a two-month streak with no virus transmissions reported within China.
Industrial production rose 5.8 per cent over the same quarter last year, a marked improvement over the first half’s 1.3 per cent contraction. Chinese exporters are taking market share from foreign competitors that still are hampered by anti-virus controls.
Retail sales rose 0.9 per cent over a year earlier. That was up from a 7.2 per cent contraction in the first half as consumers, already anxious about a slowing economy and a tariff war with Washington, put off buying. Online commerce rose 15.3 per cent.
In a sign demand is accelerating, sales in September rose 3.3 per cent.
“China’s recovery in private consumption is gathering momentum,” said Stephen Innes of AxiCorp in a report.
Economists say China is likely to recover faster than other major economies due to the ruling party’s decision to impose the most intensive anti-disease measures in history. Those temporarily cut off most access to cities with a total of 60 million people.
The International Monetary Fund is forecasting China’s economic growth at 1.8 per cent this year while the U.S. economy is expected to shrink by 4.3 per cent. The IMF expects a 9.8 per cent contraction in France, 6 per cent in Germany and 5.3 per cent in Japan.
Private sector analysts say as much as 30 per cent of China’s urban workforce, or up to 130 million people, may have lost their jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.