China's growth gives confidence to world economy
First Voice
A worker supervises production at an intelligent control unit, Nanjing, Jiangsu Province, China, October 19, 2020. /Getty Images

A worker supervises production at an intelligent control unit, Nanjing, Jiangsu Province, China, October 19, 2020. /Getty Images

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The past three months in China have shown what can be achieved if the pandemic is brought under control: China's GDP in the third quarter grew 4.9 percent compared with the previous year, showing that the economy is on a solid track to the pre-pandemic levels.  

The growth rate fell short of the expectation of 5.2-5.5 percent, but it is still a remarkable achievement considering other countries are still struggling with the pandemic and climbing out of the economic mire. Even though major economies are expecting a growth in the third quarter, the chance of going back to pre-pandemic levels is slim, as the second wave of COVID-19 is already on the way.  

The figure also confirms the latest forecast from the IMF that China will be the only major economy that grows this year at 1.9 percent, while U.S. economy is projected to shrink by 4.3 percent and eurozone by 8.3 percent.  

"It's an encouraging and hopeful message for the rest of the world," said Rob Subbaraman, global head of macro research at Nomura Holdings Inc. in Singapore in a Bloomberg interview. "If you successfully handle the health crisis, your economy can recover."

An ocean liner loads cast steel pipes at the wharf for outward transport, Lianyungang City, Jiangsu Province, China, October 19, 2020. /Getty Images

An ocean liner loads cast steel pipes at the wharf for outward transport, Lianyungang City, Jiangsu Province, China, October 19, 2020. /Getty Images

The world may look enviously at China's economic recovery, but its recovery path has been hard to replicate for other countries: a complete shutdown first to stop local transmission and then gradual reopening of all industries. There were some small clusters of COVID-19 cases, but they were also brought to control swiftly, with quick government actions to trace contacts and carry out testing at a large scale.  

The signs are promising. In the second quarter, only the farming sector grew, but in the third quarter, both industry and services sectors started to recover as well. This means that people are having more time spending. The first three quarters have seen a 15.3-percent growth in online retail sales.  

China will be "the key driver of global growth" in 2020 and 2021, said Eswar Prasad, former head of the IMF's China division, according to an article in the Wall Street Journal.

China's contributions to the world economy are more than just GDP numbers. In a highly globalized world, its recovery will also have spillover effect on other countries. Chinese consumers are spending, and they are spending big, even for luxury goods. The retail sales of the world's largest luxury goods company, LVMH, have grown 13 percent on a year-on-year basis in its Asia market, the only growth from all its markets around the world.  

Catering businesses around the world have suffered the most from the pandemic. According to WSJ, Domino's Pizza Inc. is closing 300 stores around the world due to the coronavirus. But the strong retail sales growth in China have "offered a lifeline" to the piazza marker. Its Chief Executive Richard Allision calls China "a terrific success story in 2020."  

There is a concern that China's growth was mainly driven by exports of medical equipment to other countries. Data from the third quarter does show that imports have not resumed to pre-pandemic levels. But in September alone, imports increased 13.2 percent, becoming a stabilizing factor for global industrial and supply chains. And the supply of masks from China means countries battling against the coronavirus can buy a large bulk of masks and protective suits quickly and at an affordable price. The first seven months of this year saw an almost 400-percent increase in American imports of epidemic-prevention products from China.  

In the meantime, China is also buying more iron ore from Brazil, more soybeans and pork from the U.S., and more palm oil from Malaysia. According to the New York Times, this has also partly reversed the steep drop in commodity prices during the first quarter and eased the pandemic's impact on certain industries.  

China's economy is expected to continue to pick up in the fourth quarter and retain its position as the main engine of global economic growth. Do uncertainties still exist? Sure. But in this bleak situation, China's growth is still the brightest silver lining for global economy.  

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