China announced its economy grew 4.9% annually for the quarter spanning July to September.
China was the first economy to enter the pandemic and is the first major one to emerge from it, with a number of relatively smaller outbreaks having been swiftly dealt with by authorities, meaning that its economic recovery from the coronavirus has continued in the third quarter, with services gaining momentum and growth set to continue into 2021 powered by an early and severely enforced spate of lockdowns, a nationwide test-and-trace campaigns, and a huge domestic market that has finally started to deliver a rebound in consumption.
According to South China Morning Post, the Chinese economy expanded by 4.9% between July and September, compared with a year earlier, driven by an uptick in the services sector and consistent strength in trade and industry, while no other G20 economy expected to grow this year. China’s economy looks more balanced than it did in the first half of 2020, when factories pumped out supply even as consumer demand struggled to keep pace. In September, retail sales grew at the fastest pace since December, while industrial production reported its fastest year-on-year expansion for 18 months.
“The Chinese economy basically completed its recovery in the second quarter, so it is natural that the quarter-on-quarter growth rate would decline sharply,”said Zhou Hao, senior emerging markets economist at Commerzbank., who pointed out that the pace of quarterly growth had dipped to 2.7% between the second and third quarters, after reaching 11.5% between the first and second quarters.
Analysts say China’s rebound is not rocket science
Nevertheless, there are plenty of potholes to avoid, including a fresh wave of domestic coronavirus infections, a pandemic-led depression of the global economy, and ongoing US-China tensions, which have upended China’s technology sector.
“That will complicate the outlook through the remainder of 2020. It’s unlikely we’ll see economic growth return to the levels needed in October-December to deliver annual expansion of above 2%. In light of the weak global picture,” said Nick Marro, global trade lead at the Economist Intelligence Unit, who expects 2020 growth of “around 1.7% to 1.9%”.