China's economic recovery quickens in Q3 as consumption returns
20 October, 2020
China's financial recovery accelerated in the 3rd quarter as consumers shook off their COVID-19 caution, however, overall growth missed forecasts pointing to persistent challenges for just one of the world's few current engines of demand.
The gross domestic product grew 4.9 % in the July to September period from a year earlier, the National Bureau of Statistics said on Monday (Oct 19), slower compared to the median 5.2 % forecast by analysts in a Reuters poll and following 3.2 % growth in the next quarter.
The world's second-largest economy grew 0.7 % in the first nine months from a year earlier, the statistics bureau said.
"The rebound in Q3 GDP was less strong than expected, but was still a decent 4.9 percent year-on-year," said Frances Cheung, head of macro technique for Asia at Westpac in Singapore.
"September data beat expectations, suggesting a pickup in momentum towards the latter part of Q3... The pickup in momentum was broad-based, which bodes well for the Q4 outlook."
Policymakers globally are pinning their hopes on a robust recovery in China to greatly help restart demand as economies have a problem with heavy lockdowns and the second wave of coronavirus infections.
China has been steadily recovering from decades-low growth observed in the first months of the year due to the coronavirus shock. But several recent indicators have pointed to a broader upturn in consumption as well in the third quarter.
On a quarter-on-quarter basis, GDP rose 2.7 percent from July to September, the bureau said, compared with expectations for a 3.2 % raise and an 11.5 % rise in the last quarter.
Several recent indicators have pointed to a broader upturn in consumption as well in the 3rd quarter.
Retail sales grew 3.3 percent in September from a year earlier, accelerating from a modest 0.5 percent rise in August and posting the most effective growth since December 2019. Industrial output grew 6.9 % after a 5.6 percent rise in August, showing the factory sector's recovery was also sustaining momentum.
Fixed-asset investment rose 0.8 percent in the first nine months from a year earlier, after dipping 0.3 percent in the first eight months.
The federal government has rolled out a raft of measures this season, including more fiscal spending, tax relief, and cuts in lending rates and banks' reserve requirements to regenerate the coronavirus-hit economy and support employment.
As the central bank stepped up policy support earlier this season after widespread travel restrictions choked financial activity, it has recently held off on further easing.
The International Monetary Fund has forecast an expansion of 1 1.9% for China for the entire year, the only major economy likely to report growth in 2020.
Premier Li Keqiang warned earlier in October that China must make arduous efforts to accomplish its full-year economic goals, citing a complex domestic and foreign environment.
CONSUMPTION PICKS UP
China's retail spending has lagged the comeback in factory activity as heavy job losses and persistent worries about infections keep consumers at home, even as restrictions lifted.
However, the third quarter saw several signs of a consumption recovery.
In September, auto sales marked a sixth straight month of gains with a good 12.8 % growth. Ford Motor's China vehicle sales jumped 25 percent in the September quarter from a year earlier.
Domestic passenger flights in September, meanwhile, beat their COVID-19 levels, indicating that the sector was approaching a full recovery.
The COVID-19 pandemic, which caused China's first contraction since at least 1992 in the first quarter, is currently largely in order, although there has been a small resurgence of cases in the eastern province of Shandong.
Source: www.channelnewsasia.com