A big splash - in a world plunged into recession, China manages a V-shaped recovery |  China

A big splash – in a world plunged into recession, China manages a V-shaped recovery | China

TheNE SCENE China’s corona virus recovery has caught the world’s attention more than anything else: a giant pool party in Wuhan in August, the city where the epidemic began. Nearly four months after being locked up for 11 weeks, spectators were trapped, jumping, and screaming together in waist-high water. DJ Pass-heavy beats. The video went viral. This is a moment of pure release and a sign of how China is ahead of other countries in returning to default (of a kind). Economic information is rarely as exciting as pool parties, but China’s latest GDP The figures, released on October 19, are statistically equivalent to Wuhan’s aquatic festivals.

The economy grew 4.9% in the third quarter, officials said. It was a shame for its pre-epidemic pace compared to a year ago. While most other countries are mired in recession and caught up in the new wave of Covid 19 cases, China has ended an upward leg V.Modified elastic. Analytically, its success is easy to explain. China got an important thing. By almost sealing the virus, we were able to allow the process to restart with some restrictions. Schools are fully open, factories are buzzing, and restaurants are bustling. China is also lucky in an important way. It is better protected from weak global demand than smaller counterparts like New Zealand who have done a good job of controlling the epidemic. Until vaccines are made, others will struggle to match China’s record.

Nonetheless, China’s title setback has obscured the unbalanced recovery. In February, when the government began with caution to loosen its locks, it focused on reopening factories and launching infrastructure projects. It rightly said that maintaining strict hygiene regulations in factories and construction sites would be easier than managing shopping environments or shopping malls or schools. On top of that, China’s minimal provision for unemployment insurance had to cut costs for the millions of people who fired themselves. At the beginning of the recovery, China’s economy was driven by industrial production and investment. Capital formation in type GDP Accounting covering these efforts contributed five percentage points to growth in the second quarter, while consumption was deducted more than two percentage points. It then left China with an annual growth rate of 3.2%.

Recent data reflect a somewhat consistent recovery (see chart). The contribution to third-quarter growth from capital formation, in line with pre-epidemic regulation, was reduced by three percentage points, reducing infrastructure costs. Consumption added nearly two percentage points, well below its pre-epidemic heights, but a major improvement — easily noticed in crowds returning to tourist sites, restaurants and shops. Above the trade was the cream. China’s share in global trade exports has risen to a record high during epidemics. Not only did it produce the world’s largest safety equipment, ranging from masks to surgical clothing, it also gained a boost as the first production force to resume operations.

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Whenever Chinese data is very happy, it is natural to ask if they are trustworthy. Non-limit in this caseGDP Indicators, including exports from other countries to China, provide credibility for the image of a strong reform. The big concern is whether the recovery will be at the expense of debt control efforts. Following the initial sharp recession, the government’s drive to increase bank lending will push China into debt.GDP The rate has increased by 25 percentage points to about 275% this year. This is the largest annual increase since 2009 during the global financial crisis.

Yet China is not alone. Governments around the world have run huge jumps to reduce the economic downturn from the epidemic. As its growth is back on track, China is likely to tighten again. S.&B, A credit rating agency, said the country’s real debt ratios (i.e. adjusted for inflation) have recently risen to five-year highs, which will reduce investment. If successful, China will limit irrationality to pools.

This article appeared in the China section of the print edition entitled “A Big Splash”

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