In this news, we discuss the Analysis: As COVID persists and U.S. election nears, China growth lifts Asia.
BEIJING / SEOUL (Reuters) – Asia is starting to see signs of economic recovery as it straddles a recovery in China, which enters a new phase of expansion less than a year after recording the first global cases of COVID-19.
As international attention has focused on the impending U.S. election and the fight to stop the spread of the coronavirus in the Americas and Europe, China has quietly registered improvements in several key areas.
After imposing some of the world’s toughest lockdown measures at the start of the pandemic, China is now the only major economy predicted by the International Monetary Fund to show growth – of 1.9% – this year.
Official data showed that the Chinese economy grew 4.9% in the September quarter compared to a year earlier, after growing 3.2% in the second quarter and contracting 6.8%. at the start of the year when the domestic coronavirus epidemic was at its peak and lockdowns were imposed.
(Graphic: China’s V-shaped recovery? Link 🙂
“The underlying details… make it clear that the new phase of expansion that China enters into play will prove to be strong and resilient,” said Westpac senior economist Elliot Clarke.
“As the world contracts 4% in 2020, China is expected to grow by around 2%. And by 2021, a key support for around 6% global growth will be nearly 10% growth in China. “
For China’s neighbors, this growth increases demand for their exports and supports activity in their own economies.
“China remains the only major consumer of raw materials where industrial production is now above pre-COVID levels,” analysts from the Commonwealth Bank of Australia said.
Chinese imports jumped 13.2% year-over-year in September, with a 28% increase in semiconductor imports a boon for Taiwan and South Korea in particular.
The flow for Seoul is already evident. Data on Tuesday showed that South Korea recorded its fastest quarterly growth rate in a decade in the September quarter, increasing a seasonally adjusted 1.9% after contracting 3.2% in the previous quarter. Exports climbed 15.6% in the third quarter, the largest increase since 1986 and largely reversing a 16.1% contraction in the second quarter.
“Exports improved rapidly thanks to the recovery in China and other major economies, which spearheaded our growth in the third quarter,” Finance Minister Hong Nam-ki said on Tuesday.
China’s rapid recovery has also been a relief for Japan, as China is the destination for more than 22% of its total exports, just ahead of the 19% share going to the United States.
Japanese exports to China jumped 14% in September, the largest increase in more than two years, driven by strong demand for non-ferrous metals, chipmaking equipment and automobiles.
This gives the Bank of Japan some optimism about the domestic outlook, with industry comments pointing to improving demand from China.
“Auto sales in China are increasing from year to year levels after economic activity picks up. We are seeing an increase in auto parts exports to China, ”a Nagoya transportation machinery manufacturer said in the BOJ’s Quarterly Report on Regional Economies.
Taiwan is also benefiting, although political tensions with Beijing remain high. Its exports to China grew 22% a year in September and export orders, a key indicator of global technology demand, rose 9.9% as Chinese orders jumped by nearly a third .
China’s renewed growth has spread to several sectors, including manufacturing, construction, investment and domestic demand.
However, there are risks to the outlook, including the possibility that some economies will shut down again to tame the coronavirus, a scenario from mining giant Rio Tinto RIO.AXRIO.L pointed out in a production report.
While Rio noted strong global activity in the third quarter, it also warned that a series of data suggested that “the rate of resumption of growth is slowing in most economies, pent-up demand dissipating and new locks rising. threatening the recovery ”.
In addition, any escalation of Sino-US trade hostilities or other geopolitical tensions after the US presidential election would also be a risk to Asia’s hopes for a lasting economic recovery.
Reporting by Stella Qiu in BEIJING, Leika Kihara and Tetsushi Kajimoto in TOKYO, Yimou Lee in TAIPEI and Cynthia Kim in SEOUL, written by John Mair; Edited by Jane Wardell
Original © Thomson Reuters