As most of the world still struggles with the coronavirus pandemic, China is showing once again that a fast economic rebound is possible
when the virus is brought firmly under control.To get more
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The Chinese economy surged 4.9% in the July-to-September quarter
compared with the same months last year, the country’s National Bureau
of Statistics announced Monday. The robust performance brings China
almost back up to the roughly 6% pace of growth that it was reporting
before the pandemic.Many of the world’s major economies have climbed
quickly out of the depths of a contraction last spring, when shutdowns
caused output to fall steeply. But China is the first to report growth
that significantly surpasses where it was at this time last year. The
United States and other nations are expected to report a third-quarter
surge too, but they are still behind or just catching up to pre-pandemic
levels.
China’s lead could widen further in the months to come. It has almost no
local transmission of the virus now, while the United States and Europe
face another accelerating wave of cases.
The vigorous expansion of the Chinese economy means that it is set to
dominate global growth — accounting for at least 30% of the world’s
economic growth this year and in the years to come, Justin Lin Yifu, a
Cabinet adviser and honorary dean of the National School of Development
at Peking University, said at a recent government news conference in
Beijing.
Chinese companies are making up a greater share of the world’s exports,
manufacturing consumer electronics, personal protection equipment and
other goods in high demand during the pandemic. At the same time, China
is now buying more iron ore from Brazil, more corn and pork from the
United States and more palm oil from Malaysia. That has partly reversed a
nosedive in commodity prices last spring and softened the impact of the
pandemic on some industries.
Still, China’s recovery has done less to help the rest of the world than
in the past because its imports have not increased nearly as much as
its exports. This pattern has created jobs in China but placed a brake
on growth elsewhere.
China’s economic recovery has also been dependent for months on huge
investments in highways, high-speed train lines and other
infrastructure. And in recent weeks, the country has seen the beginning
of a recovery in domestic consumption.
The affluent and people living in export-oriented coastal provinces were
the first to start spending money again. But activity is resuming now
even in places like Wuhan, the central Chinese city where the new
coronavirus first emerged.
“You’ve had to line up to get into many restaurants in Wuhan, and for
Wuhan restaurants that are popular on the internet, the wait is two or
three hours,” said Lei Yanqiu, a Wuhan resident in her early 30s.
George Zhong, a resident of Chengdu, the capital of Sichuan province in
western China, said that he had made trips to three provinces in the
last two months and has been actively shopping when he is home. “I spend
no less than in previous years,” Zhong said.
China’s broadening recovery could also be seen in economic statistics
just for September, which were also released Monday. Retail sales
climbed 3.3% last month from a year ago, while industrial production was
up 6.9%.
China’s model for restoring growth may be effective, but may not be appealing to other countries.
Determined to keep local transmission of the virus at or near zero,
China has resorted to comprehensive cellphone tracking of its
population, weekslong lockdowns of neighborhoods and cities and costly
mass testing in response to even the smallest outbreaks.
China’s rebound also comes with some weaknesses, particularly a surge in
overall debt this year by an amount equal to 15% to 25% of the
economy’s overall output. Much of the extra debt is either borrowing by
local governments and state-owned enterprises to pay for new
infrastructure, or mortgages taken out by households and companies to
pay for apartments and new buildings.
The government is aware of the risk of letting debt accumulate quickly.
But reining in new credit would hurt real estate activity, a sector that
represents up to a quarter of the economy.Another risk to China’s
recovery is its heavy dependence on exports. The surge in exports in the
last three months, along with lower prices for imports of commodities,
accounted for a big chunk of economic growth, one of the largest shares
of any quarter in a decade. Exports represent more than 17% of China’s
economy, more than double the proportion that they make up in the U.S.
economy.
China’s leaders recognize that the country’s exports are increasingly
vulnerable to geopolitical tensions, including the Trump
administration’s moves to unwind trade relations between the United
States and China. Shifts in global demand might also threaten exports,
as the pandemic batters overseas economies.
Xi Jinping, China’s top leader, has increasingly emphasized
self-reliance, a strategy that calls for expanding service industries
and innovation in manufacturing, as well as enabling residents to spend
more.
