People visit the 5G communication services exhibition area during the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing, capital of China, Sept. 7, 2020. (Xinhua/Lu Peng)
China’s economic recovery picked up steam in the third quarter and the country is confident of sustaining the current momentum amid the effective control of the novel coronavirus and the government’s sweeping efforts to stimulate demand and consumption.
Gross domestic product (GDP) expanded 4.9 percent year on year in Q3, faster than the 3.2-percent growth seen in Q2, data from the National Bureau of Statistics (NBS) showed Monday.
In the first three quarters, the country’s GDP expanded 0.7 percent year on year, returning to growth after the 1.6-percent contraction in the first half of the year and the 6.8-percent slump in Q1, the data showed.
To soften the impact of the COVID-19 shock, the government has rolled out a raft of measures, including more fiscal spending, tax relief, and cuts in lending rates and banks’ reserve requirements to stabilize growth and employment.
As the epidemic is largely brought under control domestically, factories and schools have reopened and tourist sites across the country have resumed their usual hustle and bustle.
In Q3, major indicators returned to positive territory, with industrial output rising 5.8 percent and retail sales reporting the first quarterly expansion this year, up 0.9 percent year on year.
The country’s fixed-asset investment went up 0.8 percent year on year in the first three quarters, reversing a decline of 3.1 percent in the first half of this year.
Per capita disposable income rose 0.6 percent in the first nine months, compared with a decline of 1.3 percent in H1.
“Seen from the trends of the key indicators, China’s epidemic prevention and economic recovery are at the world’s forefront, which shows the strong resilience and vitality of the economy,” said Liu Aihua, spokesperson of the NBS.
Among the bright spots, new growth drivers including the Internet-powered economy and new infrastructure have assumed a bigger role in boosting growth, and the contribution of domestic demand is steadily picking up, Liu said.
Monday’s data showed consumption pulled up GDP growth by 1.7 percentage points in Q3, compared with a 2.3-percent drag on growth in Q2.
“The unleashing of the potential of China’s super-large market not only demonstrates the country’s basic strategy of expanding domestic demand, but will also facilitate the recovery of the entire world economy,” Liu noted.
Despite the across-the-board improvements, the foundation for sustainable recovery requires further consolidation due to global uncertainties and uneven performance at home, Liu cautioned.
“Overall, China has the foundation, conditions and confidence to maintain the current trend in Q4 and the full year,” Liu added.
In the latest World Economic Outlook report released earlier this month, the International Monetary Fund (IMF) projected China’s economy to grow by 1.9 percent in 2020, 0.9 percentage points above the IMF’s June forecast, making it the only major economy that will see positive growth this year.
For future policy moves, China should maintain the stability and continuity of macro-control policies to consolidate the foundation for sustained recovery, while further increasing policy support for key areas and weak links to achieve development goals and tasks for the whole year, said Wen Bin, chief analyst at China Minsheng Bank.
In a research report on the data, Lu Ting, chief China economist with Nomura, expects China will neither add more easing measures nor start tightening in the near term.
China will carry out what it planned in late May for the scheduled budget and government bond issuance, while on monetary and credit policies, the period of quickly accelerating credit growth is over, according to the report.
“We do not expect any reserve requirement ratio cuts or rate cuts before end-2020, but expect some more liquidity injections via low-profile channels such as medium-term lending facilities and re-lending,” the report noted.