• China 3Q20 GDP grew 4.9% yoy
   
• Tech-related industries push China's industrial output higher

• Consumption growth shows encouraging factors

• FAI flips to positive in first three quarters

• Unemployment challenges as urban surveyed unemployment rate edged lower

• China remains on the road to recovery

China’s economy grew by 4.9% yoy in 3Q20, accelerating from growth of 3.2% yoy growth in 2Q20 as a shaky recovery from the coronavirus pandemic gathered strength. However, GDP growth was lower than consensus forecast of 5.5% yoy. Still, the world’s second-largest economy has recovered strongly after shrinking by 6.8% in 1Q20 – the first official contraction since the end of the Cultural Revolution in 1976 – due to the lockdown efforts aimed at stemming the tide of the coronavirus pandemic. Underpinning the recovery has been an aggressive containment of the deadly coronavirus that has allowed factories to quickly reopen and capitalise on a global rush for medical equipment and work-from-home technology - a dynamic that helped exporters win record market share in the seven months to July. The stronger growth in 3Q20 was led by strength in industry driven by robust investment and exports.

On a quarter-on-quarter basis, GDP rose 2.7% in 3Q20, compared with 11.5% rise in the previous quarter. For the first nine months of the year, the economy grew by 0.7% from the same period of 2019.

The recovery was broad-based across the three key industries. However, tertiary industry recovery continued to lag expectation at 4.3% yoy (2Q20: 1.9% yoy) while the secondary industry stood out with a growth of 6.0% yoy (2Q20: 4.7% yoy), the fastest pace since 1Q19. Primary industry growth edged higher to 3.9% yoy from 3.3% in 2Q20. Overall, the services, or tertiary, sector of the economy recovered more slowly than the primary and secondary sectors, which respectively refer broadly to agriculture and manufacturing. Out of the three categories, the services sector has grown the fastest for the last few years, but has lagged so far in 2020, up 0.4% in the first three quarters of the year versus 2.3% in the primary sector and 0.9% for the secondary.

Source: BIMB Securities Research - 19 Oct 2020