Foreign trade exceeds expectations: China's economy shakes off virus

China is likely to be the only major economy to record growth this year. This is mainly due to the fact that the People's Republic took tough action in the fight against the corona virus. The virus has now been brought under control. The rest of the world is not looking so good.

China's exports rose unexpectedly strongly in October. With growing global demand and the recovery of the second largest economy from the Corona crisis, exports in US dollars rose by 11.4 percent compared to the same month last year. As announced by the Chinese customs in Beijing, foreign trade rose by a total of 8.4 percent. In contrast, China's imports grew by just 4.7 percent in October. The increase is smaller than expected and weaker than in the previous month with 13.2 percent. However, experts pointed to the lower economic activity due to the unusually long holiday week around China's national holiday on October 1, a strong comparison month in the previous year and lower oil imports.

China benefited from stronger global demand in October – before the number of infections in the US and Europe rose again. There are concerns that the new wave could dampen exports in many other countries in China. Export orders were not growing as fast in October as before, even if they had continued to grow for the third month in a row.

Since China has the virus largely under control, its economy has also returned to normal since the summer. The People's Republic is likely to be the only major economy to grow this year. The International Monetary Fund (IMF) predicted an increase of 1.9 percent. The strong slump caused by the Corona crisis at the beginning of the year was largely made up for by autumn. In the third quarter, the Chinese economy grew again by 4.9 percent. For the next year, the monetary fund in China is even anticipating growth of 8.2 percent.

Only isolated outbreaks since summer

The first infections with the Sars-CoV-2 virus were discovered in December in the central Chinese metropolis of Wuhan – after which the pandemic developed, which dragged the global economy into recession. After initially dealing with the outbreak in Wuhan as slow and inadequate, China has cracked down on it since the end of January. The virus was brought under control with strict quarantine measures, mass tests, contact tracing and strict entry restrictions.

Since the summer, China has only experienced a few small local outbreaks, such as the most recent one in Kashgar in northwest China, but they are immediately reacted to with strict measures. Otherwise there are only a few imported cases. So everyday life has normalized. The industry is also recovering as both supply and demand improve.

The mood on the executive floors of Chinese companies is better than it has been in almost ten years, as economic barometers showed this week. The purchasing managers' index (PMI) of the business magazine "Caixin" for the manufacturing industry climbed from 53.0 to 53.6 points in October – the highest level since January 2011.