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BEIJING AND NEW YORK – After implementing a successful Covid-19 control strategy, China saw its economy grow 4.9% in the third quarter compared to the same period last year. The data was released on Sunday evening, Monday morning in Beijing, by the National Statistics Department.
Although it was slightly below the 5.2% estimated by experts, the result exceeded the increase of 3.2% registered in the previous quarter, which shows that it is possible to grow while the world is still facing the coronavirus pandemic. China is expected to be the only major economy to expand this year.
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According to Bloomberg calculations, based on data from the International Monetary Fund (IMF), China’s weight in global growth is expected to increase from 26.8% in 2021 to 27.7% in 2025, down from 27.9 % of the total. other savings combined.
The evolution of Chinese GDP caused the Shanghai, Shenzhen and Hong Kong stock exchanges to rise at the beginning of the day on Monday. Yet throughout the negotiations, with the exception of Hong Kong, China’s shares reversed their gains to close, under pressure from healthcare and industrial companies.
The CSI300 index, which includes the largest companies listed in Shanghai and Shenzhen, fell 0.76%, while the SSEC index, in Shanghai, fell 0.71%. The indices had risen 1.2% and 1%, respectively, before changing course. The Hang Senga index of the Hong Kong Stock Exchange closed the day with a rise of 0.64%.
The other Asian stocks closed higher. In Tokyo, the Nikkei rose 1.11% and the Seoul stock market rose 0.22%. In Taiwan, the increase was 1.24%.
The data reinforces the idea of recovery
Some figures released on Sunday reinforce the idea that the Chinese recovery is on the right track. Both retail sales and industrial production gained momentum in September.
Industrial production in the country grew 6.9% in September, compared to the same month of 2019, in the sixth consecutive month of recovery. In this case, analysts had forecast a lower expansion, 5.8%.
Likewise, consumer sales increased 3.3%, almost double the 1.8% forecast by analysts and more than six times the 0.5% growth in August.
– The Chinese economy remains resilient with great potential. A continued recovery is expected, which will benefit the global recovery, “said Yi Gang, governor of the People’s Bank of China, on Sunday, during an online seminar organized by the Group of 30 (G30), a private non-profit organization. profit that brings together academics and former finance ministers from around the world.
Gang said he expected China’s economy to grow by around 2% this year.
In the first nine months of the year, Chinese GDP grew 0.7% compared to the same period in 2019. The Chinese government has been taking a series of measures to reactivate the economy affected by the pandemic and maintain employment levels. Among them are more public spending, tax relief, and more lenient rules for bank loans.
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China’s economic recovery helps sustain a global economy facing its worst crisis since the Great Depression in the 1930s.
As most of the world continues to fight the coronavirus pandemic (Europeans are threatened by the second wave of Covid-19, while cases in the US continue to rise), China shows once again that it is is recovering The fast economy is possible when the virus is strictly controlled.
Behind this recovery is an aggressive strategy to contain the spread of the coronavirus, which allowed factories to reopen quickly. They also benefited from strong global demand for medical equipment and remote work technology, allowing exporters to capture record market share between January and July.
In addition, Beijing preferred to focus on aid aimed at companies, in contrast to the monetary stimulus adopted in the global financial crisis that erupted in 2008.
“China is helping the world in a different way,” said Shen Jianguang, chief economist at e-commerce giant JD.com. – With the economy slowing, it would not be possible to adopt another stimulus in 2020. Instead, it did the job by acting as a “provider of last resort.”
“It is an encouraging and hopeful message for the rest of the world,” said Rob Subbaraman, global director of macro research at Nomura Holdings Inc. in Singapore. – If you successfully address the health crisis, your economy can recover.
However, it is unclear how long the recovery will take, given domestic pressures from unemployment and rising corporate and domestic debt. China Evergrande Group, the world’s most indebted developer, has shaken investors amid fears about its financial health.
Much will also depend on how relations with the United States evolve after the November presidential elections. Any increase in trade friction could hamper export recovery.
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China is now betting on growth in sectors such as consumer goods, technology and services, as noted by President Xi Jinping last week. This will make this cycle different from the one after 2008, when there was a credit explosion, says Cui Li, Research Director at CCB International Holdings:
– The absence of credit expansion will make this recovery more sustainable.
