People enjoy a light show at the Bund in east China's Shanghai, on Oct. 5, 2020, the fifth day of National Day and Mid-Autumn Festival holiday. (Xinhua/Wang Xiang)

 
A solid improvement in domestic consumption, investment as well as factory activity suggest that the Chinese economy could grow 5 percent year-on-year in the third quarter of 2020, analysts said on Tuesday, signaling a steady recovery in the world’s second-largest economy from the COVID-19 pandemic that continues to rock the global economy as a whole. 

“Different from the strong production but weak demand in the second quarter, both ends are paving the way for strong growth for the third quarter. In particular, domestic demand is speeding up revival,” Liu Xuezhi, an economist at the Bank of Communications, told the Global Times on Tuesday.

Liu said he expects positive growth of cumulative investments and quarterly retail sales to send China’s GDP growth in the quarter skyrocketing by 5-6 percent year-on-year. 

Japanese financial services group Nomura echoed Liu’s opinion in a September report sent to the Global Times, in which it forecasted China’s real GDP growth to rise to 5.2 percent y-o-y in the third quarter. 

“We believe the other services, industrial, wholesale and retail trades, and accommodation and catering sectors may provide major boosts to China’s growth recovery in Q3, likely increasing headline GDP growth by 0.84 (percentage point), 0.35pp, 0.27pp and 0.21pp y-o-y, respectively in Q3 from Q2,” said the report. 

China’s retail sales returned to growth in August for the first time in 2020, indicating potential for stronger growth for the economy in the third quarter. 

PMI File photo:VCG

 
In addition, the country’s official manufacturing PMI saw an outstanding increase to 51.5 in September from 51 in August, continuing a seven-month growth trend. Particularly, the index for export orders hit 50.8, a record high since July 2018. 

Liu said this indicated that better-than-expected export expansion would continue. “The improving pandemic situation may help China maintain export growth till the end of the year as the world needs the Chinese goods that we are churning out,” he noted, adding that this shored up the world’s second-largest economy to head for an annual expansion rate of about 2 percent despite a global economic recession due to the pandemic.

The ongoing eight-day Chinese National Day holiday provides a glimpse into the overall revival of domestic consumption. 

Official statistics show that from Thursday to Sunday, 425 million trips to scenic spots were made within the Chinese mainland, creating 312.02 billion yuan ($45.95 billion) in tourism revenue, equal to 78 percent and 68 percent of 2019’s level. 

Over the first three days of the National Day holiday, 305 million visits were made to shopping centers across the country, big data service provider Winner Technology said. Consumer flow in Shanghai and Beijing have recovered more than 85 percent compared with pre-epidemic levels. 

File Photo: Xinhua

 
The Chinese mainland box office (including presales) during the holiday surpassed the 3 billion yuan mark on Tuesday morning, box office data compiled by Chinese ticketing platform Maoyan showed. 

Looking ahead, analysts predict that China can maintain this upward trend during the fourth quarter and even see faster growth than the third, as industries in the services sector including tourism, catering and entertainment will continue to see improvement, investments in new infrastructure projects and real estate will increase and export will expand. 

However, uncertainties, including rising protectionism, China-US trade disputes and potential resurgence of the virus, still remain, Liu warned.

Global Times