The world’s second largest economy expanded 4.9% in the July-to-September quarter compared to a year ago, according to government statistics released Monday.
“China’s economy continued its rapid rebound last quarter, with the recovery broadening out and becoming less reliant on investment-led stimulus,” wrote Julian Evans-Pritchard, senior China economist for Capital Economics, in a research note.
As much of the world continues to struggle with the virus, China’s recovery has been relatively speedy. The country enforced stringent lockdown and population tracking policies intended to contain the virus, and set aside hundreds of billions of dollars for major infrastructure projects to fuel economic growth.
A broad-based recovery
One of the most encouraging parts of China’s recovery has been the recent rebound in consumer spending, according to analysts.
Retail sales were up 0.9% in the third quarter from a year ago, with a 3.3% gain in September alone, statistics showed Monday.
More people are “willing to come out from their homes and spend money in the physical shops” as the pandemic has been brought under control, said Liu Aihua, a spokeswoman for China’s National Bureau of Statistics, at a press conference in Beijing.
A big indicator of that recovery came earlier this month, when China celebrated a busy Golden Week holiday period. During that time, hundreds of millions of people traveled around the country and spent money.
The uptick in domestic travel and spending has helped create jobs for low-skilled workers in the labor market, according to Iris Pang, chief economist for Greater China at ING. That has helped stabilize consumption even more, she added.
All told, the services sector grew 4.3% this quarter compared with 1.9% in the April-to-June period. The sector had struggled to gain traction earlier this year as partial lockdowns and social distancing policies remained in place, noted Chaoping Zhu, global market strategist at JP Morgan Asset Management. But the recent recovery signals a “more broad-based growth in the economy,” he added.
Other sectors recovered at an even faster pace than they did earlier this year.
Industrial production grew 5.8% in the third quarter from a year ago, according to Liu from the NBS. That’s faster than the second quarter’s 4.4% uptick.
In September alone, industrial production increased 6.9% from a year ago, the most in a single month this year. Technology and new energy vehicle production have been a major driver.
Keeping the focus at home
The country will work to keep its recovery going by continuing to focus on domestic demand, according to Yi, the central bank governor. He said during his Sunday speech that the domestic market will play a bigger role in generating demand.
Don’t expect the central bank to step in with any major policy changes soon, though. Analysts at Nomura said in a research note Monday that they think Beijing will maintain its “wait and see” approach as the country gauges the rest of its recovery and contends with external pressures, including its tensions with the United States.
“Beijing’s new master plan that focuses more on ‘internal circulation’… is becoming increasingly evident,” they wrote.