China’s leading economic rebound from COVID slump
China’s gross domestic product (GDP) grew 4.9% in the third quarter (July-September) from a year earlier, showing signs of its accelerating growth as the rest of the world struggles with COVID-19.
The growth path broadened from the previous quarter’s (Q2) 3.2% expansion and the 6.8% contraction in Q1 as the country’s economy continued to bounce back from the virus slump at a faster pace.
Rapid rebound
China’s economy expanded 0.7% in the year-to-date (January-September) i.e, first three quarters of this year, the National Bureau of Statistics (NBS) said. This means that the country regained all the ground it lost in the first half of the year.
Another set of recent data also showed that China’s exports grew for the fourth straight month in September as it rose 9.9% in dollar terms from a year earlier while imports surged 13.2%. The strength in imports may have dented the GDP number as Bloomberg Survey had projected 5.5% growth for the quarter. Though the rise in imports can be seen as a sign for demand.
The country’s retail and auto sales, industrial production, consumer confidence, and spending regained momentum. China’s relatively rapid return to full production after shutdowns enabled it to take full advantage of manufacturing/factory re-openings and consumer demand.
The NBS, however, noted that external uncertainties and the risk of epidemic resurgence domestically remain, reported China Daily. ‘The economy is still in the process of recovery, and the foundation for sustained recovery needs to be consolidated,’ the bureau said in a statement.
Leading recovery
China is leading the charge of global recovery, being the first to report growth from the pandemic slump as it reopened the economy sooner than its peers. Its growth lead could widen further given it almost has no local transmission of the virus now while other countries are facing another wave of cases. If China gets its economy quickly back on track, it may emerge out as a global dominating player in technology, manufacturing, and various other industries.
The International Monetary Fund (IMF) recently revised its economic outlook for China in which it projects the Chinese economy to expand 1.9% the full year, the only large economy expected to report growth in 2020. The growth, if achieved, will not be surprising as the country is already broadening out its recovery mode.
However, the corporate and household debt of the country has been on the rise as well as its relations with the U.S. has been unsettling for a while, which raises the question if this recovery will sustain. Also, will the rest of the world also emerge out with such a fast-paced recovery story?
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