While the world continues to feel the effect of the pandemic on various industries and sectors, there has been partial immergence of some economic growth in the east.
Data from the National Bureau of Statistics shows that Chinese GDP grew 3.2% YoY in the second quarter of 2020, with Chinese economic experts Nomura expecting an increase of 5.2% YoY in the third quarter. We look at what have been some of the factors which have impacted this.
Following on from strict lockdown measures to contain the COVID-19 virus, there have now been an opening up of tourism in China. This opening up has led to a strong rebound in consumer spending. As an example, on Hainan Island, customs reported 82,000 passengers between 1st and 5th October, up 34.8% on last year. They purchased 540,000 items, totalling of 530 million RMB of duty-free shopping, up YoY. This was helped by the annual duty-free shopping limit for tourists in Hainan Island have been increased from 30,000 to 100,000 RMB per person, and the types of duty-free commodities have been increased from 38 to 45.
A pattern echoed across the world, China’s online consumption which had already significantly increased during the pandemic, has continued to grow. One of the most popular eCommerce platforms TMall, shows growth of online consumption of outdoor sports activity materials, home appliances and food & beverages. With the upcoming eCommerce festival “Double Eleven” and the Chinese New Year around the corner, predictions are that revenue will continue to grow for the remainder of the financial year.
Looking beyond consumer behavior and into business activity, changes to China’s import tariffs on specific commodities, have impacted the current up-swing in China’s economy, creating opportunity to reduce business costs and creating headroom for businesses to increase output. 859 selected imported items are now lower than their previous tariff rate, including consumer goods, important drugs and advanced technology and equipment, In addition, new foreign investment law has been introduced to stimulate interests of foreign investment.
With business activity and consumer demand picking up, it is clear some economic normalization is beginning to take shape in China. Which may allow opportunity for international companies to begin to look to the Market once more. But, with lockdowns and restrictions across the west and businesses remaining cautious, the long-term effects of the virus on China, and the global economy, remain to be seen.
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