China’s economic recovery broadened in November as retail sales, industrial production rose further

Retail sales grew by 5.0 per cent from a year earlier, marking the fourth successive month of expansion
Industrial production, a gauge of manufacturing, mining and utilities output, grew by 7.0 per cent from a year earlier, up from 6.9 per cent in October

China economy

Andrew Mullenin Hong KongandOrange Wangin Beijing

Published: 10:00am, 15 Dec 2020

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China’s economic recovery broadened in November as both retail sales and industrial production growth accelerated, data released on Tuesday showed.

Retail sales, a key indicator of consumption trends in the world’s most populous nation, grew by 5.0 per cent from a year earlier, marking the fourth successive month of expansion.

This was up from 4.3 per cent growth in October and was as expected, with a poll of analysts conducted by Bloomberg having predicted growth of 5.0 per cent.

The November growth rate was the highest since reaching 8.0 per cent in December 2019.

Industrial production, a gauge of manufacturing, mining and utilities output in the Chinese economy, grew by 7.0 per cent from a year earlier, up slightly from 6.9 per cent in October. Analysts had predicted a growth of 7.0 per cent.

The November growth rate was the highest since reaching 8.5 per cent in March 2019.

Fixed asset investment grew by 2.6 per cent over the first 11 months of the year, up from 1.8 per cent in the first 10 months. This was in line with analysts’ expectations of 2.6 per cent growth.

The surveyed jobless rate, an imperfect measurement of unemployment in China which does not include figures for the tens of millions of the nation’s migrant workers, stood at 5.2 per cent in November, down from 5.3 per cent in October.

“China’s production and demand continued to rebound steadily in the fourth quarter, the economic growth is expected to continue to accelerate compared to the third quarter,” said National Bureau of Statistics spokesman Fu Linghui.

“In the next stage, China is expected to become the only country with a positive growth for the whole year among the world’s major economies.”

China’s overall economy has continued its recovery from the impact of the coronavirus, with growth in the third quarter accelerating to 4.9 per cent from a year earlier, up from 3.2 per cent in the second quarter, after a 6.8 per cent contraction in the first quarter.

China is expected to be the only Group of 20 country to record positive growth this year, with the International Monetary Fund projecting growth of 1.9 per cent this year, followed by a further acceleration to 8.2 per cent in 2021.

Within industrial production in November, the output from state-owned enterprises rose 5.9 per cent compared to last year, with private companies improving by 6.8 per cent. The output from foreign and Hong Kong-Taiwan invested enterprises also rose by 8.3 per cent.

The overall output from the manufacturing sector rose 7.7 per cent, with utilities up 5.4 per cent and mining sector output up by 2.0 per cent.

The breakdown of retail sales saw online retail sales, which included Singles’ Day, in the first 11 months of the year hit 10.54 trillion yuan (US$1.6 trillion), up 11.5 per cent year on year and 0.6 percentage points faster than the January-October period.

Revenue for the catering sector, though, dropped 0.6 compared to last year in November after a rebound of 0.8 per cent in October.

China’s economy continued to accelerate across all fronts in November. We expect output to remain above-trend in the coming quarters, even as tailwinds from stimulus and exports start to ease

Julian Evans-Pritchard

“China’s economy continued to accelerate across all fronts in November. We expect output to remain above-trend in the coming quarters, even as tailwinds from stimulus and exports start to ease,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“Foreign demand for Chinese goods will drop back as vaccines start to reverse the recent shift in global consumption patterns. And domestic policy support will be partially withdrawn next year.

“Nonetheless, we think activity will remain strong in the near-term as households run down the excess savings they accumulated this year. Favourable base effects will also help keep growth rates elevated until at least the middle of next year.”