China Economy Gathers Steam, Setting Stage for a Strong End to the Year
China’s economic activity posted a broad-based recovery in October, paving the way for a faster economic rebound in the final quarter of the year.
Both investment and consumer spending grew at faster year-over-year rates in October than the month before, while industrial production, the first sector to emerge from this year’s coronavirus-induced slump, remained solid.
Industrial output, which has led the nation’s economic recovery in recent months, rose 6.9% in October from a year earlier, on par with September’s pace and higher than market expectations for a 6.5% increase, according to data released Monday by the National Bureau of Statistics.
Fixed-asset investment rose 1.8% in the January-October period, accelerating from 0.8% growth in the first three quarters of the year and coming in higher than the 1.6% increase expected by economists polled by The Wall Street Journal.
Retail sales, a key gauge of Chinese consumer spending, rose 4.3% in October from a year ago, accelerating from a 3.3% increase in September, but lower than a 4.6% increase expected by surveyed economists.
The Chinese government’s main unemployment measure, the urban surveyed jobless rate, which excludes migrant workers who were once employed in cities but returned home for various reasons, also fell slightly to 5.3% in October, compared with September’s 5.4%.
“Economic growth in the fourth quarter is expected to be even faster than that of the third quarter,” Fu Linghui, a spokesman for the statistics bureau, said in a briefing Monday, adding that the growth in China’s imports and exports will outpace that of the world as a whole, even though uncertainties hover over the overseas economy.
China’s economy rebounded to 4.9% year-over-year growth in the third quarter, compared with a 6.8% contraction in the first quarter and a 3.2% expansion in the second quarter. Economists widely expected growth of between 5% and 6% in the fourth quarter, putting the world’s second largest economy on track to record an expansion of about 2% for all of 2020.
While expecting China’s growth to remain strong overall, Li Wei, an economist at Standard Chartered PLC, warned that momentum may slow in the coming months as new concerns about coronavirus infections exert pressure on domestic consumption and manufacturing investment. Industrial output, Mr. Li said, has limited room to grow further.
With lingering concerns about the coronavirus, China’s domestic consumption has lagged behind the broader recovery and only returned to last year’s levels beginning in August. Travel, shopping and entertainment spending during the eight-day-long National Day holiday in early October helped lift retail sales and boost consumer confidence, said Mr. Fu, the spokesman for the statistics bureau.
Overall domestic consumption likely got a further boost in November when China’s e-commerce giants, led by Alibaba Group Holding Ltd. , staged a longer version than usual of its annual Singles Day shopping festival. While deals and spending have historically been confined to Nov. 11, Alibaba and its competitors this year offered Singles Day deals for several days in November, helping Alibaba set a new sales record by raking in $75.1 billion.
Morgan Stanley economists expect private consumption in China to emerge as a key growth driver next year, as the job-market recovery continues and as Chinese households release more of their savings.
The fall in China’s urban jobless rate to 5.3% in October sustains a trend line that has seen unemployment taper off since hitting a high of 6.2% in February. The statistics bureau said separately Monday that the country hit its job creation target of 10 million jobs for the full year in the first 10 months of the year, during which 10.09 million jobs were created
China’s robust recovery also helped attract more overseas investors. Foreign direct investment rose to $11.83 billion in October, an 18.4% increase from a year earlier, extending the string of monthly year-over-year gains to seven months, according to data released by the Ministry of Commerce on Monday.
As the economy picks up steam, Beijing policy makers are considering unwinding the stimulus policies introduced this year to offset the impact of coronavirus lockdowns.
Liu Guoqiang, a vice governor of China’s central bank, said this month that it was “a matter of time” before China withdrew its stimulus. Former finance minister Lou Jiwei also said at a forum Friday that it was time for Beijing to consider withdrawing its monetary stimulus in an orderly manner.
Mr. Li, the Standard Chartered economist, said Beijing may stop short of a full unwinding of its stimulus, given uncertainties in the global recovery and rising default risk in the corporate sector.
—Grace Zhu and Bingyan Wang contributed to this article.