China’s retail sales returned to growth in August for the first time this year, and a slew of August economic data released on Tuesday indicated potential for stronger growth for the nation in the fourth quarter, shoring up the world’s second largest economy to head for an annual expansion despite a global economic recession due to the COVID-19 pandemic.
Retail sales rose 0.5 percent to about 3.36 trillion yuan ($490 billion) in August year-on-year, according to data released Tuesday by the National Bureau of Statistics (NBS), showing domestic demand has accelerated the recovery. Retail sales fell 1.1 percent in July year-on-year.
Liu Xuezhi, a macroeconomics expert at the Bank of Communications gave credit to improving auto sales and the reopening of the entertainment industry in August.
Maoyan, a Chinese movie-ticketing platform, told the Global Times on Monday that more than 95.5 million moviegoers contributed to China’s August box office, which hit 3.4 billion yuan ($500 million) – about 43 percent of the year-earlier level.
However, Wan Zhe, chief economist at the China National Gold Group Corp, told the Global Times that inflation posed a negative influence on retail sales as consumer consumption is experiencing slow recovery.
China’s consumer price index (CPI), the key indicator of inflation, stabilized at 2.4 percent increase in August, down from the 2.7 percent in July.
“Currently, production is recovering faster than consumption. While consumption is recovering in some other countries, production still remains sluggish. That’s why China’s exports maintained a strong growth rate of 11.6 percent year-on year in August,” said Wan.
This shows the resilience of China’s manufacturing industry and integrity of the structure of industrial chains, Wan noted.
Last month’s manufacturing activity remained in the expansion range, as indicated by the Purchasing Managers’ Index reading of 51, and the industrial added-value of enterprises above designated scale rose 5.6 percent in August year-on-year. NBS noted the country’s industrial added-value in the first eight months returned to 0.4 percent growth for the first time this year.
The fixed-asset investment fall has slowed in August, partly fueled by the government’s “new infrastructure” initiative in tandem with the speeding up of the manufacturing sector, said Liu. In the first eight months, China’s fixed-asset investment dropped 0.3 percent year-on-year, narrowing the decline compared with the first seven months.
Favorable policies and the improved business climate gave foreign businesses confidence to invest in China. In August, the actual use of foreign capital by China grew 18.7 percent year-on-year, hitting a record high this year, the Ministry of Commerce said on Friday.
“Given the momentum, China’s GDP growth will top 2 percent this year, and economic growth in the fourth quarter of the year may accelerate to as high as 6 percent,” Liu said.