China’s economic recovery accelerated in the third quarter as consumers shook off their coronavirus caution, although the weaker-than-expected headline growth suggested persistent risks for one of the few drivers of global demand.
China’s President Xi Jinping is applauded by, from left, State Councilor Xiao Jie, FM Wang Yi, State Councilor Wang Yong, and Defense Minister Wei Fenghe at the Great Hall of the People in Beijing, May 28, 2020. (AFP)
Policymakers globally are pinning their hopes on a robust recovery in China to help restart demand as economies struggle with heavy lockdowns and a second wave of coronavirus infections.
China has partially emerged from a record slump caused by coronavirus shutdowns in the first months of the year.
NBS spokeswoman Liu Aihua warned that growth remained patchy.
“Internally, the economy is still in the process of recovery,” she told a briefing in Beijing. “Some or most of the indicators have not returned to the normal growth level, and some of the cumulative growth rate has also declined.”
On a quarter-on-quarter basis, GDP rose 2.7 percent in the third quarter, the NBS said, compared with expectations for a 3.2 percent rise and an 11.5 percent rise in the previous quarter.
But despite the headline disappointment, analysts were encouraged by a broader upturn in consumption and continued factory strength.
Retail sales grew 3.3 percent in September from a year earlier, speeding up from a modest 0.5 percent rise in August and posting the fastest growth since December 2019. Industrial output grew 6.9 percent after a 5.6 percent rise in August, showing the factory sector’s recovery was gaining momentum.
Fixed-asset investment rose 0.8 percent in the first nine months from a year earlier, returning to year-to-date growth for the first time this year.
In the property sector, investment rose 12 percent in September from a year earlier, the fastest pace in nearly 1-1/2 years, providing a key support for broader investment.
The government has rolled out a raft of measures including more fiscal spending, tax relief and cuts in lending rates and banks’ reserve requirements to revive the coronavirus-hit economy and support employment.
While the central bank stepped up policy support after widespread travel restrictions choked economic activity, it has more recently held off on further easing.
The International Monetary Fund has forecast an expansion of 1.9 percent for China for 2020, which is close to the central bank’s own projection of 2 percent.
That would make China the only major economy expected to report growth in 2020, albeit at the slowest annual pace since 1976, the final year of of Mao Zedong’s Cultural Revolution.