Is the Chinese economy facing a recession?
Good economic data - recession? Not in China
The world's largest economy is growing by 5 percent in the third quarter. However, the country could be hit by a post-corona effect.
It's a ritual: weeks before the national statistics office in Beijing releases the quarterly figures, analysts try their hand at fortune tellers. The big financial news agencies collect the forecasts and publish the mean - this is also the case these days. The Chinese economy will grow by 5.5 percent in the third quarter, according to Bloomberg's forecast. A survey by the Chinese business magazine Caixin came to the same conclusion. An increase of 5.5 percent, and that in the middle of the Corona crisis.
The Chinese statisticians then announced the official figures punctually at ten o'clock local time on Monday: The second largest economy grew by 4.9 percent compared to the same period last year. Although this is less than many analysts had hoped, the result is sufficient to offset the slump in the spring. According to the agency, the Chinese economy grew 0.7 percent in the first nine months of the year.
In the first quarter, the world's second largest economy experienced a historic drop of 6.8 percent due to the pandemic. For the first time since the quarterly figures began to be officially recorded in 1992, China had experienced negative economic growth. At the time, there was great fear that the People's Republic would slide into recession for the first time since 1976. That year, state founder Mao Zedong had just died and the Cultural Revolution had ended.
The only big economy with growth
China is now getting past a recession - as one of the very few countries in the world. There have been hardly any new infections in China for months, so life and economic activities have returned to normal. The strict measures to contain the coronavirus, such as the cordoning off of megacities, strict isolation and entry bans, have proven to be effective. The People's Republic was able to bring the virus under control faster than many other states.
Economists assume that China will be the only major economy this year that can end the year with positive growth. The recovery is progressing faster than expected, according to a new forecast by the International Monetary Fund last week. According to this, Chinese economic output will increase by 1.9 percent this year, 0.9 percentage points more than in the June estimate. For 2021, the Monetary Fund continues to expect growth of 8.2 percent.
For Germany, for example, a decrease of 6.0 percent is initially expected this year and then an increase of 4.2 percent. In the United States, the economy is forecast to shrink by 4.3 percent in 2020 and then grow by 3.1 percent in the coming year.
But even the Chinese numbers are not all sunshine and roses. The main driver of growth is industrial production. According to the statistics agency, this increased by 5.8 percent in the third quarter. The automotive industry, for example, is already delighted that the sales figures are above the planned target despite Corona - but these figures are not a good indicator. Fear of the virus has led many families to buy a new car: it is better to drive in your own car than to risk infection in the bus or subway. However, they are often early investments. Anyone who buys a car today will also drive it in the coming year. After that, a post-corona effect could make itself felt in the Chinese balance sheets.
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