The Chinese economy in 3Q20 grew 4.9 percent YoY, continuing the positive trend from 2Q20, which saw 3.2 percent growth YoY. This expansion can be attributed to the gradual recovery experienced by the private sector, particularly domestic tourism activities that have only recently regained their vigor, after the Chinese authorities announced a relaxation of travel restrictions within the country in mid-July 2020. In addition, the production of goods and products corresponds with rising orders during this period in which the pandemic has run rampant across the globe – which consequently maintained the demand for medicines, medical supplies and medical equipment from China, such as temperature measuring devices and surgical masks. The work-from-home policy introduced in many countries has also helped to support demand for Chinese-made electronic products.
The abovementioned momentum will continue to drive the Chinese economy forward during the final quarter of 2020. KResearch anticipates that the Chinese economy in 4Q20 will grow more than 5.0 percent YoY (based on the assumption that a second wave of COVID-19 does not occur there). Nonetheless, this growth rate is notably lower than in the period before the spread of COVID-19, owing to the fact that many product categories in China's export sector which are not viewed as essential in the handling of the COVID-19 pandemic will be challenged by mounting risks amid the presently faltering global economy. Simultaneously, several economic indicators have yet to fully recover; including net income growth rate, which continues to grow at a considerably slower pace than in the period prior to the COVID-19 pandemic, to the extent that it may inhibit the recovery of the private consumption.
Regarding the Chinese economy in 2020, KResearch stands by its previous view regarding the state of economic expansion in China through year-end, that such growth will be in the range of 1.0 – 3.0 percent YoY (with a median of 1.7 percent YoY) amid the numerous risks that China is currently facing, whether from any potential worsening of the pandemic, or the brewing geopolitical risk between China and the United States.