Comic: China’s Economy the Only Bright Spot in 2020 as Other Countries Struggle

  • Economy News
Comic: China’s Economy the Only Bright Spot in 2020 as Other Countries Struggle

By Geoffrey Smith -- China, which unleashed the worst economic contraction since the Great Depression by allowing the Covid-19 virus to spread, has emerged from the crisis in better shape than virtually any other economy in the world.

The International Monetary Fund said last week it expects the Chinese economy to grow 1.9% this year, while every other G20 economy is set to shrink.

New numbers this week out of Beijing suggest that that might even be too pessimistic: Chinese gross domestic product was up 4.9% from a year earlier in the third quarter and was up 2.7% from the second quarter. Encouragingly, both industrial production and retail sales ended the quarter with growing momentum, posting their best growth since the pandemic struck.

Even allowing for China’s traditional ability to generate the kind of GDP statistics it wants, the picture is too clear to ignore: the draconian clampdown on public life in January and February has allowed a more vigorous recovery than anywhere else in the world.

It isn’t just ageing, mature markets like Europe and Japan that look pale and weak by comparison. India – whose medium-term potential growth rate is comparable to China’s – is expected by the IMF to have the worst GDP decline of any large economy this year, thanks entirely to its inability to stop the virus spreading through its tightly-packed cities and sprawling, under-resourced hinterland. Its 7.6 million cases are second only to the U.S.’s 8.2 million.

Brazil’s GDP is likewise seen shrinking by 5.2% this year and recouping barely half of those losses next year. India and Brazil have the world’s second- and third-highest death count from the virus, and shortcomings in data collection suggest that the virus’ actual toll in those countries is even higher than official figures suggest.

The varying degrees of success in fighting the virus are also reflected in the relative health of those countries’ stock markets and currencies too.

Despite a drastic deterioration in relations with the U.S. and India, another important trading partner, China’s yuan rallied to a two-year high against the dollar earlier in October, while the Shanghai and Shenzhen SZSE index is the only major index in the world that has outperformed the Nasdaq so far this year. All of the major Chinese stock indices are up in year-to-date terms, whereas India’s Nifty and Brazil’s Bovespa are down 2.2% and 15%, respectively. Russia’s RTSI meanwhile is the worst performing of all the big emerging market indices, with a 27% drop.

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