China's Q3 Economic Growth Up 4.9%... Solo Growth (Comprehensive)

Retail Sales Up 3.3% YoY in Same Month, Industrial Production Up 6.9% YoY
September PMI, CPI, Exports and Imports Show Improvement in Key Indicators...Confident in Q4 Growth

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's economic growth rate in the third quarter recorded 4.9%, showing a clear recovery for the second consecutive quarter. After plunging to minus 6.8% in the first quarter due to the impact of the novel coronavirus infection (COVID-19), China's economy succeeded in a 'V'-shaped rebound in the second quarter and continued its growth trend in the third quarter.

China's National Bureau of Statistics announced on the 19th that the third-quarter gross domestic product (GDP) increased by 4.9% compared to the same period last year. Although there were differences depending on the survey institution, the market had expected a range of 4.8% to 6.2%.

In particular, retail sales increased by as much as 3.3% year-on-year, thanks to the Chinese government's domestic demand activation policies. This far exceeded the market expectation of 1.6%. In the second quarter, consumption was not supported, resulting in only 3.2% growth.

As the Chinese government focused on revitalizing domestic demand after effectively declaring victory over COVID-19, third-quarter growth was already anticipated. Key indicators previously released, such as September export-import statistics, the Consumer Price Index (CPI), and the Manufacturing Purchasing Managers' Index (PMI), suggested higher growth than in the second quarter.

According to the General Administration of Customs of China, exports in September amounted to $239.76 billion, an increase of 9.9% compared to the same period last year. Imports reached $202.76 billion, rising by 13.2%.

Due to the increase in exports, industrial production in September rose by 6.9% year-on-year. The growth rate in the previous month was 5.6%. China's industrial production has been increasing for six consecutive months.

The Manufacturing Purchasing Managers' Index (PMI), which indicates economic trends, also rose to 51.5 last month from 51.0 in the previous month. A manufacturing PMI above the baseline of 50 indicates economic expansion, while below 50 indicates contraction.

The non-manufacturing PMI also recorded 55.9, higher than the previous month's 55.2, continuing an expansion phase for seven consecutive months.

China's fixed asset investment growth rate also turned positive. As of the end of September, fixed asset investment increased by 0.8%. The growth rate had been minus 0.3% until August.

The September CPI increase, which can gauge China's domestic market, was only 1.7%, the lowest in 18 months. Consumer prices, which had shown instability due to COVID-19, floods, and the rise in pork prices caused by African swine fever, have stabilized. The CPI increase from January to September was 3.3%, down to the Chinese government's early-year target of around 3.5%.

The stability of consumer prices was also aided by the strengthening of the Chinese yuan. The yuan against the US dollar has continuously declined from a peak of 7.1316 yuan at the end of May to 6.7010 yuan on the day.

Expectations for the fourth quarter in the Chinese financial market are even greater. Although somewhat premature, the dominant view is that domestic demand in China will normalize around the National Day holiday (October 1?8).

Inside and outside China, there are forecasts that China will achieve about 2% economic growth this year, becoming the only major economy to record positive growth.

At a briefing, Liu Aihua, spokesperson for the National Bureau of Statistics, said China's economic recovery is world-leading, explaining that "most major macroeconomic indicators, including GDP growth rate for the first to third quarters, turned positive in the third quarter." He added, "We have laid the foundation for maintaining the growth trend in the fourth quarter and for the whole year."

British economic analysis firm Capital Economics evaluated that China is the first country to return to the pre-COVID-19 growth path thanks to rapid COVID-19 control and effective economic stimulus policies.

However, as the second wave of COVID-19 in the Western bloc, including the US and Europe, becomes a foregone conclusion, there are analyses that China's economic growth may be limited. It is said that domestic demand alone has its limits.

Also, since China is not an absolute safe zone from COVID-19, concerns are emerging that the winter resurgence of COVID-19 could again hinder China's economic growth.

This content was produced with the assistance of AI translation services.