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Don't Downplay China's Resilient Economy

Source: Science and Technology Daily | 2023-09-25 10:51:48 | Author: QI Liming

Consumers buy tickets at the cinema. (PHOTO: VCG)

Edited by QI Liming

As countries around the world are bracing for economic recovery, China's economic rebound from the pandemic has always been the source of much attention. While some international organizations and analysts make rational analyses and forecasts, others deliberately talk down the Chinese economy, taking a short-sighted and prejudiced stance.

Retail sales robust with faster growth

As the economy and society returned to normalcy after the pandemic, services stifled during the COVID-19 period posted an across-the-board recovery, significantly propping up the economy.

According to China's National Bureau of Statistics (NBS), China's service sector, from cinemas to restaurants, has bounced back this year from a pandemic-induced downturn and played a greater role in sustaining the recovery of the broader economy.

The country's service production index went up 6.8 percent year-on-year in August, accelerating from 5.7 percent the previous month, and retail sales in services surged 19.4 percent in the first eight months of the year, according to NBS.

In August, the catering sector maintained strong momentum with combined revenue up 12.4 percent from a year ago. The same goes for the movie industry. Sales nationwide totaled 20.62 billion RMB (2.87 billion USD) during the summer vacation, not only surpassing the pre-pandemic high of nearly 17.8 billion RMB in 2019, but also setting a new record in the same period.

The consumption of travel services was also resilient, including rising catering revenue, surging urban subway traffic, record national railway passenger volumes, and busier airline operations. Driven by booming travel demand over the summer vacation, China's commercial passenger volume rocketed 57.7 percent from a year earlier in August.

Quoted by Bloomberg, Ding Shuang, chief economist for greater China and North Asia at Standard Chartered Plc, said perhaps the peak of pessimism is behind us. "August's data indicates that the economy is unlikely to suffer from a persisting, deeper downturn going forward, even though there might still be some volatility ahead, especially if we take into account the policy factor," said Ding.

Meanwhile, Redmond Wong, a market strategist at Saxo Capital Markets in Hong Kong said that, "Policy tailwinds, while no massive stimulus, are gathering momentum. We are calling for a rally in the equity market."

Attractive to foreign investments

Nevertheless, according to Forbes magazine, China is still attracting some globally minded foreign businesses. The American Chamber of Commerce in Shanghai Chairman Sean Stein, speaking at the U.S.-China Business Forum held in New York in August, said the Chinese government's efforts to encourage investment are currently very attractive to foreign companies that wish to be in China.

Stein added that one plus for investing in the country remains its help in spreading out costs globally. "We're seeing many companies who are in large global markets that need economies of scale. If you're not in China, you're not going to get the economies of scale needed to be globally competitive," he said.

Other companies which have very high upfront engineering costs that have to be distributed across a large volume of sales, are "probably not going to be competitive even in their home market for very long," if they aren't present in China, added Stein.

"Now when we see new investments coming in, foreign investors are often looking for a joint venture partner, a Chinese joint venture partner, because in many cases, they've got capabilities that a foreign company doesn't have on its own," he said.

Editor: 齐笠名

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