Although the pace remains below expectations, the Chinese economy is on the road to recovery in the third quarter of the year. The country where the COVID-19 virus originated is now likely to be the only major economy globally to grow in 2020.
Beijing’s Latest Economic Figures
The pandemic notwithstanding, Beijing appears to have steadied the crisis sufficiently well. The latest economic figures are a testimony of the latter and an indicator of how potent China’s economy has become.
According to the Beijing statistics office, China’s economy, the second-largest in the world, grew by 4.9 percent in the third quarter year-on-year. While less than forecast – analysts had expected an average increase of 5.5 percent – the growth is immensely positive for China.
The 4.9 percent is more than sufficient to compensate for the previous economic slump during the virus outbreak and subsequent shutdown in the spring and indicates a pick-up in China’s economic dynamics. The latter results in the overall growth of the economy of 0.7 percent in the first nine months of the current year.
China Stands Alone with Economic Resurgence
This growth does not merely have domestic implications. According to economists, China is likely to be the only major economy in the world forecast to end the year with positive growth.
The International Monetary Fund (IMF) noted the previous week that China’s recovery is progressing faster than expected. The IMF’s forecast suggests an increase in China’s economic output of 1.9 percent in 2020. The latter marks an increase of 0.9 percentage compared to the IMF’s previous forecast in June.
The IMF did not readjust the forecast growth of 8.2 percent for 2021.
China’s Global Situation Remains Complicated
However, while China’s economy has continued its steady recovery, the international environment is still complicated and highly unfavorable. Most importantly, China remains under significant pressure to prevent another outbreak of the virus.
Spring was a warning for Beijing and its economic partners. For the first time since 1992, when China first started official economic records, its economic output decreased by 6.8 percent in the first quarter of 2020.
The economy then picked up again as the country displayed the capabilities to bring the virus under control faster than other countries with strict measures – such as the cordoning off of mega-cities, strict isolation, entry bans, and others considered legally dubious in European liberal democracies.
With these measures China, according to Chinese figures, has hardly recorded any new infections for months – except for a few local outbreaks – allowing life and economic activity to return to almost normal to the extent that the country’s economy increase by 3.2 percent again already in the year’s second quarter.
The Big Picture
In addition to extensive economic aid from the Beijing government via – inter alia – stimulus programs, China’s economy has recently also benefited again from more substantial foreign trade. Compared to the previous year, the country’s exports in September increased by 9.9 percent, as the Beijing Customs Administration announced last week. As a result, imports increased by 13.2 percent in the same period.
What makes these figures remarkable is that other major economies’ prospects are less favorable than in China. Germany, always lauded for its strong economy, expects a decline of its GDP by 6 percent in 2020 before increasing again by 4.2 percent in 2021. Likewise, the US economy, which was producing record figures before the pandemic. Now it is forecast to decrease by 4.3 percent in 2020 and grow by only 3.1 percent in 2021.