The
Chinese economy in the third quarter of 2020 grew 4.9%YoY, continuing the
positive trend from the second quarter of 2020 in which a 3.2% growth YoY was
seen. This expansion can be attributed to the gradual recovery of private consumption,
particularly retail sales that grew 3.3% YoY in September after being seen to contract
14.01%YoY during the first half of 2020, and 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 medicines, medical supplies and medical equipment corresponds with rising orders during this period in which the pandemic has run
rampant across the globe. The work-from-home policy introduced in many
countries has also helped to support demand for Chinese-made electronic
products. As a result, China’s total exports in the third quarter of 2020
continued to expand at 8.8%YoY, following a slight expansion of 0.14%YoY in the
second quarter of 2020.
KResearch
views that the abovementioned momentum will continue to drive the Chinese
economy to grow more than 5.0%YoY during the final quarter of 2020 (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 the 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; these include 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 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%YoY (with a median of 1.7%YoY) amid the
numerous risks that China is currently facing, whether from any potential
worsening of the COVID-19 pandemic, or the brewing geopolitical risk between
China and the United States.
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