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talkpolitics...Wait for it...
...You guessed it...
...China!
China's economic recovery gains even more momentum
China was the first to be hit by the coronavirus. The total lock-downs and other severe restrictions hit its economy pretty hard. For the first time since 1992, the world's second largest economy suffered a negative growth (-6.8%) for Q1 of this year. The whole country was practically closed. Hundreds of millions had no choice but stay in strict quarantine for weeks and months.
All the pain must have paid off good, not just from a health standpoint but also economic. For months there've been almost no new covid cases in China, save for a couple dozen a day, most of them incoming from abroad. They have to stay in a two-week quarantine in specially designated hotels after arrival, anyway. This seems to have had the desired effect. China is currently nowhere near the situation in Europe and North America.
As a consequence, the Chinese economy is gaining momentum again. +3.2% in Q2, and now +4.9% in Q3. Sure, the number is slightly lower than the expected 5.5%, but still, the result allows them to compensate for the initial disaster. The overall growth of the Chinese economy for the first 3 quarters is +0.7%. Parties and gatherings are again being organized in Wuhan, with thousands of attendees. 600+ million trips have been made around the country during the October holidays.
Other indexes are also improving for the third quarter: industrial production has grown by 5.8%, and everyday market trade has increased by 0.9% compared to last year. The foreign trade data also exceeds all expectations. Although China's major trade partners are still in big trouble, Chinese exports have grown by 9.9% in September compared to last month, and imports by 13.2%.
The experts expect China to be the only major economy to have a positive growth this year. The IMF estimates that China will emerge as the winner from the global scramble for economic recovery. Their GDP is expected to grow by 1.9% this year, which is 0.9% more than the June forecast. The IMF expects a 8.2% Chinese growth for 2021.
In comparison, Germany is expecting a -6.0% shrinking this year, followed by a +4.2% growth next year. The US expects -4.3% this year, then +3.1% next year. Thus, the pandemic is expected to close the gap between the world's two biggest economies in the short term.
Of course, although all this fast recovery does seem nice on paper, China is still facing various challenges. As in other countries, the pandemic has mostly hit the poorer segments. The average monthly income of the migrant workers has dropped by 7% for Q2 compared to last year, the World Bank estimates. Millions have lost their jobs. Unemployment is 5.4% (it's 7.9% in the US).
There are also serious concerns that the pandemic might come back to China as it has done elsewhere. The government's fear of another large-scale pandemic was clearly shown in the last few days in the coastal city of Tsindao. Once a local outbreak was discovered there, the authorities immediately tested more than 100,000 workers. Within a few days, the entire population of almost 10 million were also tested. It eventually transpired that the outbreak was indeed very localized, just 13 infections contained within a hospital, and it hadn't spread among the population. Indeed, with such mass testing and local lock-downs China has shown that it's capable of reacting swiftly to contain a wider spread (other examples include Beijing itself, and some regions along the border with Myanmar).
They've learned their lesson. Maybe we could learn something from them, too.
...You guessed it...
...China!
China's economic recovery gains even more momentum
China was the first to be hit by the coronavirus. The total lock-downs and other severe restrictions hit its economy pretty hard. For the first time since 1992, the world's second largest economy suffered a negative growth (-6.8%) for Q1 of this year. The whole country was practically closed. Hundreds of millions had no choice but stay in strict quarantine for weeks and months.
All the pain must have paid off good, not just from a health standpoint but also economic. For months there've been almost no new covid cases in China, save for a couple dozen a day, most of them incoming from abroad. They have to stay in a two-week quarantine in specially designated hotels after arrival, anyway. This seems to have had the desired effect. China is currently nowhere near the situation in Europe and North America.
As a consequence, the Chinese economy is gaining momentum again. +3.2% in Q2, and now +4.9% in Q3. Sure, the number is slightly lower than the expected 5.5%, but still, the result allows them to compensate for the initial disaster. The overall growth of the Chinese economy for the first 3 quarters is +0.7%. Parties and gatherings are again being organized in Wuhan, with thousands of attendees. 600+ million trips have been made around the country during the October holidays.
Other indexes are also improving for the third quarter: industrial production has grown by 5.8%, and everyday market trade has increased by 0.9% compared to last year. The foreign trade data also exceeds all expectations. Although China's major trade partners are still in big trouble, Chinese exports have grown by 9.9% in September compared to last month, and imports by 13.2%.
The experts expect China to be the only major economy to have a positive growth this year. The IMF estimates that China will emerge as the winner from the global scramble for economic recovery. Their GDP is expected to grow by 1.9% this year, which is 0.9% more than the June forecast. The IMF expects a 8.2% Chinese growth for 2021.
In comparison, Germany is expecting a -6.0% shrinking this year, followed by a +4.2% growth next year. The US expects -4.3% this year, then +3.1% next year. Thus, the pandemic is expected to close the gap between the world's two biggest economies in the short term.
Of course, although all this fast recovery does seem nice on paper, China is still facing various challenges. As in other countries, the pandemic has mostly hit the poorer segments. The average monthly income of the migrant workers has dropped by 7% for Q2 compared to last year, the World Bank estimates. Millions have lost their jobs. Unemployment is 5.4% (it's 7.9% in the US).
There are also serious concerns that the pandemic might come back to China as it has done elsewhere. The government's fear of another large-scale pandemic was clearly shown in the last few days in the coastal city of Tsindao. Once a local outbreak was discovered there, the authorities immediately tested more than 100,000 workers. Within a few days, the entire population of almost 10 million were also tested. It eventually transpired that the outbreak was indeed very localized, just 13 infections contained within a hospital, and it hadn't spread among the population. Indeed, with such mass testing and local lock-downs China has shown that it's capable of reacting swiftly to contain a wider spread (other examples include Beijing itself, and some regions along the border with Myanmar).
They've learned their lesson. Maybe we could learn something from them, too.
