BEIJING – With most of the world’s coronavirus epidemics struggling, China is once again showing that a rapid economic reversal is possible when the virus is firmly brought under control.
The Chinese economy grew 9.9 percent in the July-September quarter compared to the same month last year, the country’s National Statistics Office announced Monday. Strong performance brings China back about 6 percent of the growth it knew before the epidemic.
Many of the world’s major economies have risen sharply from the depths of the contraction last spring, while output has plummeted due to the shutdown. But China is the first registry to report growth that significantly surpassed where it was at this time last year. The United States and other countries are also expected to see an increase in the third quarter, but they are still lagging behind or just reaching pre-epidemic levels.
China’s lead could expand further in the coming months. It now has almost no local transmission of the virus, while other cases in the United States and Europe are facing a surge.
The massive expansion of the Chinese economy means it will dominate global growth – accounting for at least 30 percent of the world’s economic growth this year and in the coming years Cabinet Adviser and National Honorary Dean Justin Lin Yifu. School Development for Development at Peking University, said at a recent government news conference in Beijing.
During the epidemic, Chinese companies accounted for more of the world’s demand for exports, consumer electronics, personal safety equipment and other items. At the same time, China is now buying more iron ore from Brazil, more corn and pork from the United States, and more palm oil from Malaysia. Which has weakened commodity prices since last spring and softened the impact of the epidemic on some industries.
Still, China’s recovery has done little to help the rest of the world compared to the past because its imports have not increased as much as its exports. This pattern has led to employment in China but has put a brake on growth elsewhere.
China’s economic recovery has also been dependent on months of huge investments in highways, high-speed train lines and other infrastructure. And in recent weeks, the country has seen a resurgence in domestic consumption.
People living in prosperous and export-oriented coastal provinces were the first to start spending money again. But even in places like the central Chinese city of Wuhan, where the new coronavirus has emerged, activity is now resuming.
“You had to stand to go to many rest restaurant rentals in Wuhan, and for the famous Wuhan rest restaurant rentals on the Internet, you have to wait two or three hours,” said Lei Yanqiu, a Wuhan resident in her 30s.
George Zongeng, a resident of Chengdu, the capital of western China’s Sichuan province, said he had traveled to three provinces in the past two months and was actively shopping while at home. “I don’t spend less than in previous years,” Mr. Zhang said.
In the last three months, China’s economic growth has fallen slightly below economists’ forecasts of 5.5 per cent to 5.5 per cent. But the performance was still so strong that the stock markets of Shanghai, Shenzhen and Hong Kong rose in early trading on Monday.
The country’s extended recovery recovery can only be seen in the September economic data, which was also released on Monday. Retail sales rose 3.3 percent last month, while industrial production rose 9.9 percent.
China’s model for re-establishing development may be effective, but it may not be attractive to other countries.
Determined to keep local transmission of the virus at or near zero, China has resorted to extensive cellphone tracking of its population, week-long lockdowns in neighborhoods and cities, and costly mass testing in response to small outbreaks.
China’s revival also comes with some weaknesses, especially this year with overall debt growth amounting to 15 to 25 percent of the economy’s overall output. Most of the additional debt is borrowed by local businesses and state-owned enterprises to pay for new infrastructure, or by mortgages taken by homes and companies to pay for s partitions and new buildings.
The government is aware of the danger of allowing debt to accumulate quickly. But investing in new credit will hurt real estate activity, an area that represents up to a quarter of the economy.
Another risk for China’s recovery is its heavy dependence on exports. Low prices for imports of goods, along with an increase in exports over the past three months, are a major contributor to economic growth, the largest share in any quarter in a decade. Exports still represent more than 17 percent of China’s economy, more than double what it makes in the American economy.
Chinese leaders have acknowledged that the country’s exports are increasingly vulnerable to geopolitical tensions, including the Trump administration’s move to destabilize trade relations between the United States and China. Changes in global demand could also put exports at risk, as the epidemic spreads to foreign economies.
China’s top leader Xi Jinping has placed more emphasis on self-reliance, a strategy that seeks to expand service industries and innovate in manufacturing, as well as enable residents to spend more.
“We need to make customers the mainstay,” said Qiu Baoxing, a cabinet adviser who is a former vice minister of housing, at a news conference in Beijing. “By focusing on domestic circulation, we really increase our own resilience.”
But empowering consumers has long been a challenge in China. Under normal circumstances, most Chinese are forced to save for education, health care and retirement due to a weak social security net. The economic downturn and epidemics are meant to exacerbate the problem for lost jobs, especially for low-income and rural residents.
Beijing’s approach to helping ordinary Chinese during the recession was to give companies tax breaks and large loans from government-owned banks so that businesses would not have to lay off workers. But some economists argue that Beijing will have to issue coupons or checks for more direct assistance to the country’s poorest citizens.
Millions of Chinese migrant workers in the spring were suffering at least a month or so of unemployment because factories were slow to reopen after the epidemic. Young Chinese found themselves drowning in food savings or getting another job to get a slashed wage.
But Chinese government economists are wary of paying consumers directly. He says the government’s priorities are investment-based growth and measures to improve productivity and quality of life, such as digging new sewer systems or adding elevators to million-year-old partition towers that are lacking.
“We’ve seen a lot of suggestions for increasing consumption, but Crooks has to get people rich first,” said Yao Jingyuan, a former chief economist at the National Bureau of Statistics.
Western governments have experimented with offering extra-large unemployment checks, one-time payments and subsidized meals in restaurants. The payment is intended to help households maintain a minimum standard of living through an epidemic – which has increased demand for imports from China.
“People from other government-subsidized countries continue to turn to China for products during the epidemic,” said Michael Pattis, a finance professor at Peking University. “We will see a resumption of the trade war, and only the U.S. China, but global. “
Liu Yi and Amber Wang contributed to the research.
