The Chinese economy is at the forefront of efforts for a global recovery from the coronavirus pandemic, overshadowing the United States, which continues to be plagued by a rising number of COVID 19 cases.
According to government figures, the world’s second largest economy grew 4.9 percent between July and September compared to the same quarter a year ago. However, economists had expected growth of 5.2 percent.
China’s economy contracted by 6.8 percent in the first quarter of the year as the pandemic closed factories and production facilities. This was China’s first economic contraction since quarterly GDP data collection began in 1992.
However, China’s rise to become the first major economy to recover from the pandemic began in the second quarter and grew by 3.2 percent in the three months. China is expected to be the only G20 economy to grow this year.
Yi Gang, China’s central bank governor, said officials predicted annual growth of around 2 percent. However, experts have often questioned the accuracy and transparency of China’s official economic data.
Industrial production rose 6.9 percent year-on-year in September, while retail sales, an earlier weak point in the recovery, rose 3.3 percent.
Car sales were also up 12.8 percent this month, while domestic air traffic exceeded pre-pandemic levels.
The International Monetary Fund (IMF) expects global growth to contract by 4.4 percent this year – the worst since the Great Depression of the 1930s.
The Fund estimates that China – where COVID-19 broke out before it spread around the world – will grow by 8.2 percent next year. By comparison, the USA will only grow by 3.1 percent.
The U.S. economy crashed at a record 31.4 percent in the second quarter – the largest single quarter decline in history – but is expected to show a rapid recovery in the third quarter.
It will release its July-September GDP report on October 29, just five days before the presidential elections.
The world’s largest economy has suffered from a rising number of COVID 19 cases, with the weekly case average rising in 48 of the country’s 50 states. On Friday, it recorded the highest daily case count since July.
There is a fierce debate in the U.S. about measures to contain the spread of the infection, to balance the protection of public health during the pandemic and to support the economy, whose collapse also raises questions of health and well-being.
The regime in China, on the other hand, which is repressive and not democratic, reacted draconically to COVID-19 in order to bring the virus under control within a relatively short period of time.
This is what Yoshikiyo Shimamine, chief economist at the Dai-ichi Life Research Institute in Tokyo, told Reuters: “China’s economy is still on the road to recovery, driven by a recovery in exports. Consumer spending is also moving in the right direction, but we cannot say that it has completely shaken off the resistance caused by the corona virus”.
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This is due to the fact that China’s total exports last month rose by 9.9 percent year-on-year to $239.8 billion, compared with growth of 9.5 percent the previous month. This was the fourth consecutive month of growth, according to customs data.
China’s exports to the United States last month rose 20.5 percent year-on-year to $44 billion, despite the Trump Administration’s tariffs.
Exporters benefited from record demand for masks and medical supplies and received a boost from the early reopening of the Chinese economy. They also benefited from robust demand for electronic products despite Washington’s crackdown on Beijing’s technological ambitions.
President Donald Trump stopped supplying components to companies, including China’s leading technology company Huawei, for intellectual property and national security reasons. The technology giant has become a lightning rod for geopolitical tensions with China.
China’s world trade surplus increased by 6.6 percent to $37 billion, but this was a sharp drop from the $58.9 billion deficit recorded in August. The data showed that the country’s largest trading partner was ASEAN, which accounted for more than $416 billion in the first 8 months of the year.
Imports increased by 13.2 percent to $202.8 billion, compared to a 2.1 percent drop in August. Imports of American goods increased by 24.5 percent to 13.2 percent during this period.
Demand for imported manufactured goods such as iron ore and copper has increased as automakers return to normal operations. However, retail sales remain weak as customers are reluctant to spend.