Chinese economy accelerates as virus recovery strengthens

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China’s fragile economic recovery from the coronavirus pandemic is strengthening as consumers return to shopping malls and car dealerships while the United States and Europe suffer painful contractions.Growth in the world’s second-largest economy accelerated to 4.9% from a year earlier in the three months ending September, from 3.2% in the previous quarter, official data showed on Monday. Retail spending has rebounded above pre-virus levels for the first time, and factory production has increased, driven by export demand for masks and other medical supplies.

Growth “always accelerates”

China is the only major economy expected to grow this year while activity in the United States, Europe and Japan contracts.

The recovery “is widening and becoming less dependent” on government stimulus measures, Julian Evans-Pritchard of Capital Economics said in a report. He said growth “is still picking up pace” as the current quarter approaches.

Most Asian stock markets rose on news of increased activity in China, all of its neighbors’ main trading partner. Japan’s Nikkei 225 index added 1.1 percent while Hong Kong’s Hang Seng climbed 0.9 percent. The markets in South Korea and Australia also advanced.

The Shanghai Composite Index, China’s benchmark, fell 0.7% due to expectations, relatively strong data will reduce the likelihood of further stimulus that could push up stock prices.

Warning on the 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, stores and offices. .

The economy contracted 6.8% in the first quarter, its worst performance since at least the mid-1960s, before rebounding.

The economy “continued to recover steadily,” the National Bureau of Statistics said in a report. However, he warned, “the international environment is still complicated and harsh”. He said China was facing strong pressure to prevent a resurgence of the virus.

On Monday, a worker is seen on scaffolding at a construction site for a residential complex in Beijing. (Tingshu Wang / Reuters)

Authorities have lifted the brakes on travel and business, but visitors to government and other public buildings are still being screened for the fever indicative of the virus. Travelers arriving from overseas 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 discovered. This broke a two-month streak with no reported virus transmission in China.

Industrial production rose 5.8 percent from the same quarter last year, a marked improvement from the 1.3 percent contraction in the first half. Chinese exporters are taking market share from foreign competitors who are still hampered by antivirus controls.

Retail sales increased 0.9% from a year earlier. That was up from a 7.2% contraction in the first half as consumers, already worried about a slowing economy and a tariff war with Washington, postponed their purchases. E-commerce grew 15.3%.

In a sign, demand is picking up, sales in September rose 3.3 percent.

“The recovery of private consumption in China is gaining momentum,” Stephen Innes of AxiCorp said in a report.

Economists say China is expected to recover faster than other major economies due to the ruling party’s decision to impose the most intensive anti-disease measures in history. These temporarily cut off most access to cities of 60 million people in total.

The International Monetary Fund forecasts China’s economic growth of 1.8% this year, while the US economy is expected to shrink 4.3%. The IMF expects a contraction of 9.8% in France, 6% in Germany and 5.3% in Japan.

Private sector analysts say up to 30 percent of China’s urban workforce, or up to 130 million people, may have lost their jobs at least temporarily. They say up to 25 million jobs could be lost permanently this year.

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