China’s economic recovery continued in August, but analysts warn of ‘pent-up demand’ running out of steam

Consumer confidence is climbing as retail sector shows first growth of year

Industrial production remains one of the main drivers of China’s economic recovery following its coronavirus lockdown measures

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Consumer confidence in China continued to improve in August, as evidenced by increased spending on cars and eating out. Photo: EPA-EFE

Published: 8:15pm, 15 Sep 2020Updated: 11:52pm, 15 Sep 2020

Better-than-expected economic data out of China reaffirms that the world’s second-largest economy is continuing its strong recovery from the coronavirus health crisis, but analysts warn that household demand is likely to taper off in the near-term while tensions with the United States could put a dent in China’s exports.

Industrial production, which gauges manufacturing and mining activity, grew in China by 5.6 per cent year on year in August, accelerating from 4.8 per cent in July.

And retail sales, a vital metric of consumption in the world’s biggest market, grew by 0.5 per cent compared with the same month last year, up from a 1.1 per cent contraction in July and ahead of analysts’ expectations of no growth. This marked the first growth in China’s retail sector this year.

Fixed-asset investment, the 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 the decline of 1.6 per cent in the January-July period, as investment edges back towards growth after collapsing earlier this year.

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 because it does not include millions of migrant workers.