BEIJING – As the year is drawing to a close, China’s economic rebound from COVID-19 is gathering pace as mirrored by improvements in key growth figures, which, for many market watchers, are a boon for the world economy still scrambling to shake off the severest recession in nearly a century.
In the latest World Economic Outlook, the International Monetary Fund (IMF) projected China’s economy to grow by 1.9 percent in 2020, 0.9 percentage points above its June forecast, making China the only major economy that will see positive growth this year.
“With the right mix of supportive macroeconomic policies focused on strengthening social safety nets and further key reforms, China will secure the recovery and ensure balanced and high-quality growth, which will benefit China and the world,” said IMF Managing Director Kristalina Georgieva.
Rebound on track
A set of early indicators had shown that an across-the-board recovery of the world’s second-largest economy was firmly on track.
In November, the purchasing managers’ index for the manufacturing sector, the main gauge of factory activities, reached 52.1 — well above the boom-bust line of 50 and representing the highest level of the year.
Accounting for more than half of China’s GDP growth, the service sector has long been one of its main economic barometers. Last month, the sub-index for business activities in the service sector rose to 55.7, also the highest level of the year.
In terms of foreign trade, the revival continued too, as both new export orders and import sub-indexes hit a year-high and stayed in the expansion territory for three consecutive months.
Some China watchers are concerned that the country’s recovery is unbalanced, with a faster rebound in the industrial sector and declining consumer spending, despite the latter being emphasized by the leadership as a leading driver amid a broader shift toward consumption-oriented growth.
In yet another encouraging sign, the consumption sector rebounded too. In November, China’s retail sales of consumer goods went up by 5 percent year-on-year to 3.95 trillion yuan ($604.7 billion), up from the 4.3-percent gain in October after positive growth in August.
More vigorous consumption recovery became apparent during this year’s Singles’ Day shopping festival, which yet again shattered a string of records from total sales volumes of participating brands.
Boosted on the rebound, global chief financial officers (CFOs) have upgraded China’s economic outlook to “Modestly Improving” for Q4 from “Stable” in Q3, showed a survey by the CNBC Global CFO Council, which gathers around 150 CFOs of some of the world’s largest companies.
The CFOs responding to Q4’s survey feel more optimistic about the Chinese economy, the survey said.
At a time when the coronavirus-triggered recession looms large globally, China’s pace of expanding opening-up has been accelerating, generating positive spillover effects on the world economic recovery.
China signed the Regional Comprehensive Economic Partnership agreement with other participating countries in mid-November. The world’s largest trade pact will likely open up more sectors and promote business flow among signatories.
It is conducive to boosting regional trade, and the spillover effects of China’s growth will improve the economic recovery of participating countries, according to Steven Zhang, the chief economist at Morgan Stanley Huaxin Securities.
Amid efforts to nurture fertile ground for foreign businesses to thrive, China has this year implemented the Foreign Investment Law, trimmed the negative list for foreign investment, and eased foreign access to the financial market.
Merlin Swire, chairman of Swire Pacific Limited, welcomed China’s ongoing policy of a higher-level opening-up, saying that foreign investors have experienced strengthened investor protection, a more leveled playing field, and a better business environment.
Focusing on future high-quality growth, China has put forward a new development pattern of “dual circulation,” to forge better connectivity between internal and external markets.
China’s massive demand is estimated to generate over $27 trillion of imports of goods and services in the following 10 years. It will surely provide a lasting boost to global revival in the post-pandemic era, Huang added.
“It is clear that no economic recovery from the current global economic slowdown is possible without China being a major part of the equation,” noted Rohana Mahmood, chair of APEC Business Advisory Council.