China’s Factory Output Beats Forecasts As Asia Shakes Off COVID Slump

China’s factory output rose faster-than-expected in October and retail sales continued to recover albeit at a slower-than-forecast pace, as the world’s second-largest economy emerged from its COVID-19 slump.

Industrial output climbed 6.9% in October from a year earlier, data from the National Statistics Bureau showed on Monday, in line with September’s gain. Analysts polled by Reuters had expected a 6.5% rise.

The upbeat figures came as other Asian economic powerhouses also climbed out from their pandemic depths with Japan’s economy reporting its fastest quarterly growth on record.

China’s industrial sector has staged an impressive turnaround from the pandemic paralysis seen earlier this year, helped by resilient exports.

Now, with the coronavirus largely under control in China, consumers are opening up their wallets again in a further boost to activity.

China’s fourth-quarter economic growth will accelerate from the third quarter, Fu Linghui, spokesman of the National Statistics Bureau said, told reporters at a briefing.

Consumption prospects are improving, with the services industry showing good recovery momentum, Fu said.

Retail sales rose 4.3% on-year, missing analysts’ forecasts for 4.9% growth but faster than the 3.3% increase in September.

China’s auto industry reported robust 12.5% growth in October vehicle sales thanks to surging demand for electric cars and trucks.

Domestic tourism also saw a strong rebound over the Golden Week holiday last month, although levels were still well short of last year’s.

Fixed-asset investment rose 1.8% in January-October from the same period last year, compared with the 1.6% growth forecast and a 0.8% increase in the first nine months of the year.

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Property investment was a key driver of broader spending with October real estate investment up 12.7% from a year ago, the fastest pace since July 2018 and quickening from 12% seen in September, according to Reuters calculations based on NBS data.

Property sales by floor area rose a solid 15.3%, the highest in over three years, while new construction starts expanded 3.5%, improving from last month’s fall of 1.9%.

However, government efforts to prevent bubbles in the property sector are gaining traction with Chinese new home prices growing at a slower monthly pace in October amid restrictions imposed in some big cities.

Private sector fixed-asset investment, which accounts for 60% of total investment, fell 0.7% in January-October, compared with a 1.5% decline in the first nine months of the year.

While China’s economic recovery looks to be accelerating, surging coronavirus infections in Europe and the United States have clouded the outlook for exports.

Former Chinese finance minister Lou Jiwei said last week trade frictions between the United States and China may not ease in the near-term, even under a Joe Biden presidency.

Analysts believe a Biden administration is likely to maintain a tough political stance on Beijing, keep tight restrictions on China’s access to advanced technology, although it could act in a less aggressive and more predictable way than the Trump administration.

China’s economy grew 4.9% in the third-quarter from a year earlier, but annual growth could slow to just over 2% for 2020. That would be the weakest in over three decades but still much stronger than other major economies.

– Reuters