China Outshines U.S. as First Major Economy to Recover From Pandemic

China's economy is leading the charge for a global recovery from the coronavirus pandemic, overshadowing the United States which continues to reel from a rising number of COVID-19 cases.

The world's second-largest economy grew 4.9 percent between July and September compared to the same quarter last year, according to government data. But economists had expected growth of 5.2 percent.

During the first quarter of the year, China's economy shrank by 6.8 percent as the pandemic closed factories and manufacturing plants. It was China's first economic contraction since the recording of quarterly GDP data began in 1992.

However, its rebound to becoming the first major economy to recover from the pandemic started in the second quarter, growing 3.2 percent in the three month period. China is expected to be the only G20 economy to grow this year.

Yi Gang, China's central bank governor, said officials predict annual growth of around 2 percent. However, experts have often questioned the accuracy and transparency of China's official economic data.

Industrial production in September rose 6.9 percent, compared to the same period last year, while retail sales, a previous weak spot in its recovery, jumped 3.3 percent.

Car sales also increased 12.8 percent during the month while domestic air travel exceeded pre-pandemic levels.

The International Monetary Fund (IMF) expects global growth to shrink 4.4 percent this year—the worst since the Great Depression in the 1930s.

The fund estimates that China—where COVID-19 broke out before spreading across the world—will grow by 8.2 percent next year. The U.S. will only see a growth of 3.1 percent in comparison.

The U.S. economy plunged at a record rate of 31.4 percent in the second quarter—its biggest drop in a single quarter in history—but is expected to show a snap-back rebound in the third quarter.

It will release its July-September GDP report on October 29, just five days before the presidential election.

The world's largest economy has suffered from a rising number of COVID-19 cases, with the weekly case average rising in 48 of the country's 50 states. On Friday it recorded its highest daily case total since July.

In the U.S. there is fierce debate about measures to control the spread of infection, balancing the protection of public health in the pandemic and supporting the economy, the collapse of which also creates health and wellbeing issues.

The regime in China, by contrast, which is repressive and not democratic, mounted a draconian response to COVID-19 in order to control the virus within a relatively short period of time.

Yoshikiyo Shimamine, chief economist at Dai-ichi Life Research Institute in Tokyo, told Reuters: "China's economy remains on the recovery path, driven by a rebound in exports. Consumer spending is also headed in the right direction, but we cannot say it has completely shaken off the drag caused by the coronavirus."

It comes as China's total exports last month rose 9.9 percent from a year ago to $239.8 billion, up from 9.5 percent growth the previous month. This was the fourth consecutive monthly gain, customs data showed.

Chinese exports to the United States climbed 20.5 percent to $44 billion last month, compared to a year ago, despite tariffs from the Trump Administration.

Exporters reaped the benefits of record demand for masks and medical supplies and received a boost from China's early reopening of its economy. It also benefited from robust demand for electronic products despite Washington's clampdown on Beijing's technology ambitions.

President Donald Trump has cut off supplies of components for companies including China's leading tech firm Huawei over intellectual property and national security concerns. The technology giant has since become a lightning rod for geopolitical tensions with China.

China's global trade surplus increased 6.6 percent to $37 billion but this was a sharp decrease from August's $58.9 billion gap. The data showed that the country's biggest trading partner was the ASEAN countries, which accounted for more than $416 billion in the first 8 months of the year.

Imports jumped 13.2 percent to $202.8 billion compared to August's contraction of 2.1 percent. Imports of American goods rose 24.5 percent to $13.2 percent during the period.

The demand for imported industrial materials such as iron ore and copper has been on the rise as car manufacturers are back to normal activity. However, retail sales remain weak as customers hold back on spending.

China economy retail
People in Beijing walk outside a shopping mall complex during the country's national "Golden Week" holiday. Retail sales, a previous weak spot in China's recovery, jumped 3.3 percent in the latest quarter. AFP via Getty Images/Nicolas Asfouri

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