China Economy in a Snapshot Q3 2020 Report

Economic Outlook

As the Chinese government has stepped up the resumption of work and production, supported by fiscal and monetary policy stimulus, the economy has continued recovering in H2 2020. 

The CEIC Leading Indicator improved to 111.5 in June 2020 from 110.4 in May, rising consecutively for the fourth month from a low of 62.3 in February. The smoothed CEIC Leading Indicator for China also continued to rise, reaching 109.1 in June 2020. This can be considered as a strong signal that the Chinese economy is getting back to normal at a relatively fast pace.

Lingering softness in domestic demand and an impending global recession is likely to constrain China’s growth over the second half of 2020, although industrial production, retail sales of consumer goods and investment in fixed assets underscore an upward trend. China International Capital Corporation, the country’s most prominent investment bank, has sharply lowered its real GDP growth forecast for 2020 to 2.6%, from 6.1% previously, while Oxford Economics expects just 1% in 2020.

Digital technology will create momentum and become a driving force for economic and social development. The next few years are expected to deliver a larger-scale deployment of 5G, the ‘Internet of Things’, industrial Internet and other digital transformation technologies.
To bolster GDP growth, China has set a more aggressive fiscal deficit ratio and is borrowing more by issuing special treasury bonds and local government special-purpose bonds. China is also working on a package of macroeconomic policies to propel growth.