The Chinese Economy Recovered to Pre-Covid Levels
China stole the headlines in the last years. Directly involved in the trade war with the U.S., it is also the country where the current pandemic originated.
Having a quick start in the fight against the virus when compared to other countries, China succeeded in defeating it. However, it had a totally different approach when compared to the Western world.
To start with, it focused on eradicating it but not allowing it to spread. Only once these succeeded, the focus shifted to finding a cure. The West did just the opposite.
Chinese culture also helped. State control did so too. But what remains at the end of the day is that the Chinese economy is back on track, contracting only in the first quarter of the year. In fact, the second and the third quarters growth rates erased the loss in the first quarter, putting the Chinese economy back on tracks to expand in 2020.
Why the Chinese Economic Growth Good News?
Over the weekend, the latest Chinese GDP was released. It showed a strong rebound in the manufacturing sector, but also in fixed-asset investment.
Where did the demand for Chinese products come? Surprise, surprise – the United States is responsible for over 20% of the demand for Chinese products in the month of September. Also, ASEAN countries imported more by 12.8% on a y-o-y basis.
The quick Chinese economic recovery is terrific news for the rest of the world. To fully understand its impact, we must consider the last decades. China was/still is the world’s manufacturer. However, in the meantime, the services industry grew exponentially too.
Every single multinational corporation in business at the start of the years 2000 had one single destination in plan – go to China. That is, either to manufacture there or to import from there.
Not much changed in the meantime in the West relations with China. However, China changed a lot.
Coming back to 2020, the quick Chinese recovery means a helping hand for the rest of the world. Europe, for instance, is almost paralyzed by the second wave of COVID-19 infections. The United States is not looking better either. For the Asia-Pacific countries, Chinese recovery means more demand for their raw-materials (e.g., Australia), dairy products (e.g., New Zealand), and so on.
To sum up, the world did not change that much from an economic point of view. The better the Chinese economy is doing, the better for the rest of the world.