China economy’s broad recovery from coronavirus continues, as retail sales grow for first time in 2020

Industrial production grew by 5.6 per cent in August from a year earlier, with retail sales growing by 0.5 per cent

Economic recovery in China continues to be powered by industry, but retail sector records best performance of 2020

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China’s retail sector returned to growth in August for the first month since December 2019. Photo: AP

Published: 10:00am, 15 Sep 2020Updated: 12:05pm, 14 Oct 2020

Industry, retail and investment all showed marked improvements in August, as the Chinese economy continued its broad-based recovery from the ravages of the coronavirus earlier this year, according to new data released by the National Bureau of Statistics on Tuesday.

Retail sales, a vital metric of consumption in the world’s biggest market, grew by 0.5 per cent compared to the same month last year, up from minus 1.1 per cent in July and ahead of analysts’ expectations of 0.0 per cent growth. This marked the first growth in the retail sector this year, with January and February’s data having been combined to account for distortions relating to the pandemic.

Industrial production, which gauges manufacturing and mining activity in the world’s second largest economy, grew by 5.6 per cent year on year in August, up from 4.8 per cent in July. This was better than analysts’ expectations, with the median result of a Bloomberg poll of economists forecasting 5.1 per cent growth. It was also the best industrial growth since December 2019.

Fixed asset investment, the year-to-date value of spending on real estate, infrastructure and capital equipment, fell by 0.3 per cent from a year earlier in the first eight months of 2020. This was an improvement on July’s minus 1.6 per cent reading, as investment edges back towards growth following a collapse in the early part of the year. It was also better than the median forecast of minus 0.4 per cent.

The surveyed jobless rate dropped to 5.6 per cent in August, from 5.7 per cent in July. However, while this is an indicator of the unemployment rate in a certain segment of the urban population, it is not viewed as an accurate depiction of the overall employment situation.

This marks the first month since December 2019 that retail sales have not fallen in China, in what has been a time of strain for the consumer economy. It comes as the government in Beijing attempts to give the domestic economy renewed focus, as part of its dual circulation plan.

We think that China’s economic recovery is on a reasonably firm footing now and should continue through the fourth quarter and into 2021

Louis Kuijs