By Jonathan Cheng
BEIJING--Chinese officials said Monday that gross domestic
product expanded by 4.9% in the third quarter from a year earlier,
putting China's economy back toward its pre-coronavirus trajectory
half a year after the pandemic gutted its economy.
The 4.9% growth figure for the third quarter fell short of
expectations but brings China's trajectory closer in line with
forecasts made at the beginning of the year for 2020 growth of
between 5.5% and 6%--forecasts made before the pandemic swept
across the globe, killing more than a million people and crushing
the global economy.
The third-quarter expansion builds on the second quarter's 3.2%
growth, which follows a historic contraction of 6.8% in the first
three months of the year, when authorities locked down the central
Chinese city of Wuhan in a bid to curb the fast-spreading
virus.
The International Monetary Fund is projecting China's economy to
expand by 1.9% in 2020, putting it on track to be the only major
world economy to grow this pandemic-hit year.
By contrast, the American economy is expected to shrink by 4.3%,
while the eurozone is forecast to contract by 8.3%, the IMF said in
its latest update this month.
Monday's third-quarter growth number offers further evidence of
China's relative strength and moves the country's economy into
positive territory for the first nine months of the year, expanding
0.7% from a year earlier.
Other economic indicators released Monday offered additional
signs of strength. China's headline unemployment figure, the urban
surveyed jobless rate, fell to 5.4% in September, lower than
August's 5.6% rate and Beijing's target of around 6%.
China revived its economy in roughly three stages: first, by
shutting down most economic activity beginning in late January, a
lockdown that lasted largely until the end of March.
Beginning in April, authorities sought to get factories revved
up again. With production ramping up, China was able to increase
its share of global exports, shipping medical equipment like face
masks and sterilizer in addition to work-from-home computer
equipment to customers around the world as other exporting nations
suffered through their own lockdowns.
If the second quarter represented China's factory recovery, then
the third quarter marked its consumer recovery, with
authorities--having almost entirely stamped out the coronavirus
within its borders--encouraging consumers to begin venturing
outside of their homes and opening up their wallets.
In August, Chinese retail sales showed an increase from a year
earlier for the first time in 2020. And on Monday, China said
retail sales grew 3.3% in September, outpacing economists'
expectations for 1.7% growth.
Chinese citizens' disposable income also turned to growth in the
third quarter for the first time this year, officials said Monday,
rising 0.6% from a year earlier.
American consumer-focused companies with operations in China
have benefited from the return of domestic demand.
Domino's Pizza Inc. said strong retail sales growth in China
during the third quarter offered a lifeline to the pizza maker's
international business at a time when about 300 of the company's
global locations were closed by the coronavirus, Chief Executive
Richard Allison told investors this month, calling China "a
terrific success story in 2020."
"While we've had some slowdown in some of our markets around the
world, China is definitely not one of them," Mr. Allison said,
predicting that China would soon grow to become the Ann Arbor,
Mich.-based company's largest market outside the U.S.
Spice and condiment maker McCormick & Co., whose brands
include French's mustard and Old Bay Seasoning, said that while
global sales fell by 1% in the three months ended Aug. 31 due to
lower demand from restaurants in the Western world, the decline
would have been much worse without China, where demand remained
strong.
In China, traffic at fast-food restaurants "has returned to
near-normal levels," Lawrence Kurzius, chairman and chief executive
of Hunt Valley, Md.-based McCormick, told investors late last
month.
Even so, consumer spending remains subdued, according to some
metrics.
During an eight-day-long National Day holiday that began on Oct.
1, 637 million people traveled within the country, spending some
$69 billion, according to official figures--roughly 70% of spending
during last year's shorter seven-day-long holiday.
China's box office, which has been hit hard by restrictions that
limit capacities in movie theaters, racked up the equivalent of
about $580 million over the holiday according to the nation's
Commerce Ministry--the second-highest October holiday haul in
China's history, but still a far cry from last year's
record-setting $750 million.
That has raised concerns about the robustness of the consumer
recovery, after hopes that a combination of pent-up demand, an
extra holiday day and closed borders forcing travelers to redirect
any overseas spending at home would result in a stronger
rebound.
"The rebound is lower than expected considering the sharp drop
in overseas travel," Betty Wang, a senior China economist at
investment bank ANZ, told clients. "It is too early to be
complacent."
Xin Xin, a mother of two, flew with her husband and children to
southwestern Yunnan province for their eight-day holiday after
months of lockdown in Beijing.
"It was my first real vacation this year. I really don't want to
be stuck in the same city any longer," Ms. Xin said. The price of
their plane tickets was higher than usual, since more people chose
to travel domestically this year, given the long lockdown and the
difficulty of going abroad.
Hotels and other accommodations were almost twice as expensive
as usual--and yet rooms were still snapped up quickly, Ms. Xin
said. Prices for some five-star hotels near tourist sites soared
due to the increased demand, forcing her to make do with more
modest lodgings.
Zhou Misi and her family, meantime, stayed put in Beijing during
the eight-day break, cramming in five movies at the cinema.
Ms. Zhou and her family, put off by reports of large traffic
jams in and out of the capital and around China's scenic spots,
decided to take advantage of the fact that movie theaters were open
again after being shut for months. Big screens were reopened in
late July and municipal authorities in Beijing are now allowing for
occupancy of 75% in cinemas.
Ms. Zhou was surprised to see the theater was almost fully
packed when she went to watch an IMAX movie in the morning.
"I didn't expect so many people would go to watch movies," she
said.
Grace Zhu and Bingyan Wang contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com
(END) Dow Jones Newswires
October 18, 2020 23:23 ET (03:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.