China’s economy accelerates as virus recovery gains strength

China’s economic growth accelerated to 4.9% over a year earlier in the latest quarter as a shaky recovery from the coronavirus pandemic gathered strength.

Factory output rose, boosted by global demand for masks and other medical supplies, while retail spending returned to pre-virus levels for the first time, government data showed on Monday.

The recovery is “broadening out and becoming less reliant” on government stimulus, said Julian Evans-Pritchard of Capital Economics in a report. He said the data showed growth “still accelerating” heading into the present quarter.

China, where the pandemic began in December, became the first major economy to return to growth after the ruling Communist Party declared the disease under control in March and began reopening factories, shops and offices.

The world’s second-largest economy expanded by 3.2% over a year earlier in the three months ending in June, rebounding from the previous quarter’s 6.8% contraction, its worst performance since at least the mid-1960s.

The economy “continued the steady recovery”, the National Bureau of Statistics (NBS) said in a report.

However, it warned “the international environment is still complicated and severe”. It said China still faces “great pressure” to prevent a resurgence of the virus.

Authorities have lifted curbs on travel and business but visitors to government and other public buildings are still checked for the virus’s telltale fever.

Travellers arriving from abroad must be quarantined for two weeks.

Last week, more than 10 million people were tested for the virus in the eastern port of Qingdao after 12 cases were found there. That broke a two-month streak with no virus transmissions reported within China.

The NBS reported that industrial production rose 5.8% in July-September over the same quarter last year, a marked improvement over the first half’s 1.3% contraction.

Retail sales rose 0.9% over a year earlier. That was up from a 7.2% contraction in the first half as consumers, already anxious about a slowing economy and a tariff war with Washington, put off buying.

In a sign demand is accelerating, sales in September rose 3.3%.

“China’s recovery in private consumption is gathering momentum,” said Stephen Innes of AxiCorp in a report.

China has reported 4,634 coronavirus deaths and 85,685 confirmed cases, as well as three suspected cases.

Economists say China is likely to recover faster than some other major economies due to the ruling party’s decision to impose the most intensive anti-disease measures in history.

Those temporarily cut off most access to cities with a total of 60 million people.

Private sector analysts say as much as 30% of the urban workforce, or as many as 130 million people, may have lost their jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.

The ruling party promised in May to spend £215.6 billion on meeting goals including creating 9 million new jobs.

But it has avoided joining the United States and Japan in rolling out extensive stimulus packages due to concern about adding to already high Chinese debt.