Poll sees China economy picking up pace in Q3

With the virus now largely under control in China, consumers are back in restaurants and malls, and travelling for domestic holidays and to tourist districts. (AFP)
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Updated 18 October 2020

Poll sees China economy picking up pace in Q3

  • Consumer spending gradually increasing as coronavirus fears ease

BEIJING: China’s economic recovery gathered pace in the third quarter, according to a poll of analysts, with consumer spending gradually picking up as coronavirus fears eased, helping a wider rebound spurred by investment and exports.

Growth in July-September is expected to come in at 5.2 percent when official data is released on Monday, bringing the world’s second-largest economy closer to last year’s 6.1 percent annual expansion, even as countries around the world struggle to contain the deadly pandemic.

With the virus now largely under control in China, most social distancing measures have been removed — and consumers have streamed back into restaurants and malls, hopped on flights and trains for domestic holidays and packed tourist districts.

AFP’s survey, involving analysts from 13 institutions, also forecast full-year growth of 2.3 percent, slightly above the International Monetary Fund’s forecast, which tagged China as the only major economy likely to expand this year.

“China’s stimulus has differed from that of much of the region with its focus on the industrial sector and construction, rather than for small and medium-sized enterprises or direct payments to the unemployed,” said Moody’s Analytics economist Xu Xiaochun.

“Thus, China’s rapid recovery is led by goods-producing industries and export shipments.”

Nathan Chow of DBS Bank added that the biggest boost came from investments, especially those driven by the government, while overseas demand has also improved. 

While consumer spending has lagged behind, it is catching up “at least among middle- and upper-income households,” and retail sales are nearing their levels of late 2019, Xu said.

But economists maintained that growth will be modest and driven mostly by production rather than services, adding that lingering uncertainty has led to an increase in savings.

HSBC analysts added in a recent report that China’s recovery has been “highly uneven,” stressing a rebound in the private sector will be “essential for a sustainable economic recovery.”

Economists warned, however, that a sharp rebound is unlikely for Chinese consumer demand given the anxiety surrounding the virus, while global tensions are also weighing on the external market.

Tommy Wu, lead economist at Oxford Economics, said that analysts are still “waiting for signs of a more significant improvement in employment, which will underpin consumption.”

Consumers will remain wary about buying large amounts of goods and services during economic uncertainty, while “the external market is not likely to help the Chinese economy either,” said Raphie Hayat, senior economist at Rabobank.

“China’s tensions with several countries are increasing, while some of its trading partners are experiencing second wave outbreaks of the virus.”

This could boost certain exports such as protective equipment and electronics but the effect will “likely be more than offset by generally weaker external demand,” he said.

Wu said that the pace of recovery is likely to slow in the last three months of the year, as credit to real estate and infrastructure investment decelerates.


Ski resorts out in the cold as France eases lockdown

Updated 27 November 2020

Ski resorts out in the cold as France eases lockdown

  • Frustrated resort operators count the cost of holiday season restrictions

MEGEVE, France:  Megeve, in the foothills of Mont Blanc, was gearing up to welcome back skiers before Christmas after a COVID-19 lockdown was eased.

But France’s government — while allowing cinemas, museums and theaters to reopen from Dec. 15 — says its ski slopes must stay off limits until 2021, leaving those who make their living in the Alpine village frustrated and, in some cases, perplexed.

“When you’re outside, when you’re doing sport outdoors, that’s not the moment when you’re going to give COVID-19 to someone. COVID-19 is passed on in enclosed places,” said Pierre de Monvallier, director of ski school Oxygene, which operates in several resorts including Megeve.

Announcing a phased easing of the lockdown on Tuesday, French President Emmanuel Macron said it was “impossible to envisage” re-opening ski slopes for Christmas and New Year, and that he preferred instead to do so during January.

“It felt like the door had been slammed in our face,” said Catherine Jullien-Breches, the mayor of Megeve, whose green slopes are generally covered with snow by mid-December.

“Unfortunately it’s a real drama for the economies of the villages and the winter sports resorts.”

People who live within 20 km of France’s Alpine resorts will able to visit from this weekend, but with the lifts staying shut, the main draw is missing.

“It’s like going on holiday on the Cote d’Azur and being told the sea is off limits,” said David Le Scouarnec, co-owner of Megeve’s Cafe 2 la Poste.

The problem for the resorts — and the hotels, restaurants, and workers who depend on them for their livelihood — is that their season is short, and they will have little time after the New Year to claw back lost revenue.

Other European authorities are wrestling with the same problem. Italy’s resorts regions are seeking approval for restricted skiing, but Austria, whose biggest cluster of the first wave of the pandemic was at the ski resort of Ischgl — where thousands were infected — is skeptical.

Prevarication cuts little ice, however, with Mathieu Dechavanne, Chairman and CEO of Compagnie du Mont-Blanc, which operates cable cars at Megeve and other resorts.

He said who could not understand why the government allowed trains and metros to operate, but barred him from re-opening. “It’s like we’re being punished. We don’t deserve this. We’re ready.”