After the corona break-in: China's upswing is gaining momentum

Tuesday, December 15, 2020

After the corona break-in
China's upswing is gaining momentum

China's economy has a lot of tailwind: Rising demand, higher credit growth and stimulus measures are ensuring a quick recovery from the pandemic slump. In the fourth quarter the upward trend seems to accelerate further.

In China, the economic situation continues to brighten after the corona shock. Three important indicators published by the Beijing Statistics Office confirm the sustained upward trend. In November production in industrial companies increased by 7 percent compared to the previous year, slightly exceeding the growth of the previous month (6.9 percent).

Retail sales also made another leap, increasing by 5 percent in November after a plus of 4.3 percent in October. Investments in property, plant and equipment rose by 2.6 percent in the period from January to the end of November. All data were in line with analysts' expectations.

As a result of the corona pandemic, China suffered its first negative growth since 1992 with the economy slumped by 6.8 percent in the spring. But because the most populous country seems to have got the virus under control, the economy has been picking up speed for months. In the third quarter, the second largest economy grew by 4.9 percent year-on-year. That alone was enough to more than compensate for the previous slump in the spring. The International Monetary Fund recently estimated that the Chinese economy will grow by 1.9 percent this year. That would make it the only major economy that would even create a plus.