China's economic recovery continues to strengthen
By Abigail Townsend
Date: Tuesday 15 Dec 2020
(Sharecast News) - China's post-pandemic economic recovery continued into November, the latest official data showed on Tuesday.
According to China's National Bureau of Statistics, industrial output growth reached 7.0% in November, in line with expectations and marginally ahead of October's 6.9% rise.
Retail sales also grew, to 5.0% year-on-year, as consumer demand continued to recover. Analysts had been looking for a rise of 5.2%, but it was still an improvement on October's 4.3% growth. November's figure was boosted by a strong Singles Day.
Yi Xiong, analyst at Deutsche Bank, said: "The improvement is even larger once the effect of lower consumer prices is excluded: in real terms, retail sales growth reached 6.2% in November, which is already higher than the average growth of 5.9% in 2019.
"Retail sales was led by a consumer demand recovery following the normalisation of social activities. Notably, cosmetic sales were up 32% year-on-year, and jewellery says up 25%."
Car sales rose 11.8%, while household appliances sales grew by 5.1% in November. Communications equipment sales jumped 43.6%.
The data also showed that fixed-asset investment rose 2.6% in the ten months to November year-on-year, while private sector fixed-asset investment edged ahead 0.2%.
Stephen Innes, chief global market strategist at Axi, said: "Overall economic data looks very solid, and confirms that China's recovery accelerated in November. The external conditions - exports - keep improving, and now we see more signs that the domestic economy, including retail sales, are gaining momentum.
"The NBS press conference tone was very optimistic, saying that this year China could be the only major economy posting positive GDP growth, and kind of rubbing salt in the global economy's wounds."
However, Miguel Chanco, senior Asia economist at Pantheon Macroeconomics, said: "Trends at the margin continued to soften overall. On our adjustment, production rose at an annualised rate of 12.6% in the three months to November, compared with the previous three months, down from 13.3% in October, and marking a continued slowdown from the 60.7% peak.
"We aren't putting too much weight on the supposedly firmer [industrial production] monthly gain in November, as the partial hard data show a number of key sectors pulling back. Vehicle production for one dropped by 0.9% month-on-month, on our adjustment, erasing most of October's 1.2% gain."
At a news conference in Beijing following the data's publication, an NBS spokesperson said growth in 2021 was expected to be "relatively fast" in 2021, Reuters reported.
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