It looks like China is almost out of the woods as the export and goods-producing industries picked up pace in the third quarter, resulting in almost pre-pandemic figures.
According to a poll of analysts conducted by Agence France-Presse (AFP), the country and its economy will see a stronger bounce back and is predicted to hit 5.2%—a figure closer to 2019’s annual growth of 6.1%.
The analysts based on the survey also expect China’s full-year growth to hit 2.3%, which is slightly higher compared to the International Monetary Fund’s (IMF) forecast.
Meanwhile, analysts threw different perspectives as to why China recovers faster than other economies.
Nathan Chow of DBS bank, for instance, claimed that the improvement was massively due to investments, particularly government-led investments. Overseas demand added to the growth as well.
Economist Xu Xiaochun of Moody Analytics, on the one hand, explained that the positive trend is likely due to China’s stimulus strategy. According to Xiaochun, the country focused on the construction and industrial sector instead of small to medium businesses as well as financial aid and unemployment benefits.
“Thus, China’s rapid recovery is led by goods-producing industries and export shipments,” he continued.
Consumer spending is catching up as well despite its slow growth, mainly from middle and upper-income families.
The recovery, however, is unlikely to take a sharp rebound as uncertainties brought by the pandemic continue to affect consumers.
A senior economist from Rabobank even claimed that consumers will remain wary of purchasing large amounts of goods and services given the situation and that “the external market is not likely to help the Chinese economy either.”
“China’s tensions with several countries are increasing, while some of its trading partners are experiencing second wave outbreaks of the virus,” Raphie Hayat added.
Analysts from HSBC also emphasized the country’s “highly uneven” recovery to which they added that a rebound in the private sector is needed for “a sustainable economic recovery.”
Tommy Wu of Oxford Economics said that analysts are still “waiting for signs of a more significant improvement,” which he said will “underpin consumption.”
The lead economist also said that while the recovery is currently positive, the deceleration of credits to real estate and infrastructure investment could affect the trend. He said the situation could slow down the recovery in the last three months of 2020.
Images courtesy of Apex 2013/Flickr
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