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China’s Economic Recovery Strengthens, Fueled by Export Boom

China’s recovery gathered pace in November, supported by strong demand from home and abroad, putting the economy further ahead of its peers as the only major one likely to expand this year.
Media Tour of Nio Inc. Electric Vehicle Production Plant Employees work on the assembly line during a media tour of the Nio Inc. production facility in Hefei, Anhui province, China, on Friday, Dec. 4, 2020. Nio is cementing its role as a challenger to Tesla Inc. in China's premium electric-vehicle segment, with both companies benefiting as the coronavirus pandemic recedes in the country. Photographer: Qilai Shen/Bloomberg
Bloomberg
By Bloomberg
15 Dec 2020
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China’s Industrial output rose 7% in November from a year earlier, in line with the median estimate in a Bloomberg survey of economists. Retail sales expanded 5% in the period, as projected. Fixed-asset investment grew 2.6% in the first 11 months of the year from the same period in 2019, also as expected

  • The unemployment rate inched lower to 5.2% from 5.3%
China's Steady Rebound

Key Insights

  • The data shows the breadth of the recovery since a contraction in output in the first quarter triggered by the coronavirus pandemic. An industrial-led rebound has been followed by a pickup in consumer spending. Exports have rocketed in recent months as a return to virus restrictions in many of China’s biggest markets fueled demand for medical equipment and work-from-home electronic devices
  • Retail sales were likely boosted by the ‘Singles’ Day’ shopping festival on Nov. 11, signaling solid demand. For first 11 months of the year, sales were still down 4.8% compared with the same period in 2019
  • The profitability of industrial firms has rebounded, although some companies are struggling under large debt loads. A series of recent defaults by state-owned enterprises roiled local debt markets and is making it harder for some to borrow money
  • A set of early indicators showed China’s economic recovery stabilizing toward the end of the year. Growth is set to reach 5.9% in the current quarter and 2% for the full year, according to economists surveyed by Bloomberg
  • Assuming that Covid-19 is kept under control, China’s rebound should continue through the final quarter, sustained by “the continued recovery of consumption, robust infrastructure investment, resilient property activities, and strong exports,” UBS Group AG economists led by Ning Zhang wrote in a report before the data release

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  • Investment continues to be fueled by state-owned businesses, which grew 5.6% in the January-November period from a year ago. Fixed-asset investment by private companies gained 0.2% in the period, the first time it was positive this year
  • For a breakdown of manufacturing growth, click here
  • The central bank continued to provide ample liquidity to support the recovery, injecting 950 billion yuan ($145 billion) of one-year cash via the medium-term lending facility on Tuesday, more than offsetting the 600 billion yuan that matures in December

What Bloomberg Economics Says...

The solid activity reduces the need for the People’s Bank of China to cut interest rates in the near term, but it doesn’t mean the PBOC will be able to withdraw policy support quickly. We expect the central bank to take steps to smooth corporate funding as it begins the long process of policy normalization.

Chang Shu, chief Asia economist

For the full report, click here

  • The retail sales figures boosted sentiment among consumer stocks. The MSCI China Consumer Staples Index reversed an earlier decline to gain 0.4%

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