STREAMING NOW: Watch Now

China is winning the global economic recovery

Millions of people in China are traveling again during the first major holiday since the Covid-19 outbreak. As China shows its confidence in containing the pandemic, will getting the country moving around come at a risk? CNN's David Culver reports.

Posted: Oct 11, 2020 12:41 PM
Updated: Oct 11, 2020 12:41 PM

While much of the world scrambles to prevent new coronavirus cases from stalling the fragile recovery from recession, China's economy is hitting its stride again and will end the year more influential than ever.

The world's second largest economy was the only major world power to avoid a recession this year as Covid-19 forced lockdowns and crippled businesses. China's GDP is expected to grow 1.6% this year, while the global economy as a whole will contract 5.2%, according to summer projections from the World Bank.

China built its relatively quick recovery through several measures, including stringent lockdown and population tracking policies intended to contain the virus. The government also set aside hundreds of billions of dollars for major infrastructure projects, and offered cash incentives to stimulate spending among its populace. The payoff has been evident, as tourism and spending rebounded during last week's busy Golden Week holiday period.

By the end of the year, China's share of global GDP is likely to rise by about 1.1 percentage points, according to a CNN Business calculation using World Bank data. That's more than triple the share it gained in 2019. By contrast, the United States and Europe will see their shares dip slightly.

All told, China's economy is expected to be worth about $14.6 trillion by the end of 2020, roughly equivalent to 17.5% of global GDP.

Even without the disruption caused by the virus, China's share would have ticked up this year, according to Larry Hu, chief China economist for Macquarie Group. But China's ability to buck the worldwide trend is accelerating the growth in its importance to the global economy.

"The recovery in China has been much stronger than the rest of the world," Hu added.

A Golden Week boom

The economic improvement has been no more apparent than during this past week, when the country celebrated one of its annual Golden Week holidays. This season's festivities marked the founding of the People's Republic of China and the Moon Festival, and was one of the country's busiest travel seasons of the year.

More than 630 million people traveled around the country during Golden Week, which ended Thursday, according to the Ministry of Culture and Tourism. That's nearly 80% of the numbers who traveled during the same period last year.

Tourist spending, meanwhile, recovered to nearly 70% of last year's level, reaching $70 billion. And movie ticket sales surpassed $580 million during the Golden Week holiday — just 12% shy of last year's record high.

The holiday week's numbers are "encouraging," said Macquarie's Hu.

"As life is returning to normal in mainland China, consumption, especially the service consumption, is under recovery," he said, added that pent-up demand has finally been unleashed.

A more balanced recovery

Even before the holiday, China's economy had been picking up momentum.

An official gauge of manufacturing activity rose to a six-month high in September. A private survey from the media group Caixin, which measures smaller businesses, also showed the sector continued to expand last month.

The services sector is also doing well. An official survey released last week put activity at its highest level in nearly seven years. And on Friday, a Caixin survey revealed that services experienced one of the quickest paces of expansion in the past decade in September.

"Overall, the economy remained in a post-epidemic recovery phase and improved at a faster pace," Wang Zhe, senior economist at Caixin Insight Group, said in a report accompanying Friday's data.

Consumer spending is rebounding, too, in yet another encouraging sign. Economists were concerned earlier this year that China's recovery was too unbalanced, having been driven by lots of state-led infrastructure projects and not enough consumer spending.

And despite trade tensions, China's economy has also benefited from its vital role in global supply chains, according to Louis Kuijs, chief Asia economist at Oxford Economics. The research and advisory group's own calculations also indicate that China will increase its share of global GDP by about a percentage point this year.

"In contrast to expectations of ... changes in global supply chains away from China, it looks as if, at least for now, China's success in shaking off the Covid-19 outbreak and keeping factories operating has strengthened its role in global value chains," Kujis said. He pointed out that US foreign direct investment into China actually rose 6% in the first half of this year, according to China's Ministry of Commerce.

"Even as US-China tensions have worsened dramatically recently, many US multinationals remain keen to engage with China," Kujis said, adding that American firms were likely encouraged by Beijing's decision to remove some barriers to investing in the country's financial sector.

Challenges ahead

While China's recovery has been strong, there are challenges ahead.

Like in other countries, the pandemic has taken a heavy toll on China's poor and rural populations, according to the Fitch Ratings analysts.

The average monthly income collected by rural migrant workers fell nearly 7% in the second quarter compared to a year earlier, according to World Bank estimates that used Chinese government data. The hundreds of millions of people who fit that description typically work in construction, manufacturing and other low paying but vital activities.

And low-income households in China — those who make less than $7,350 a year — experienced the most severe declines in family wealth out of any other income group, according to a survey jointly conducted by China's Southwestern University of Finance and Economics and Ant Group's research institute.

"This suggests the recent recovery in consumption is likely to have been somewhat skewed towards higher-income groups," the Fitch Ratings analysts said.

And Kuijs of Oxford Economics said that US-China tensions remain a concern, even as foreign direct investment grows.

If the United States were to decouple "significantly from China," the country's growth would trend less than half a percentage point lower per year through 2040, he said, as long as other developed countries maintained most ties.

But if other developed countries join the United States, he suspected that impact could be much larger, causing China's GDP growth to fall twice as fast through the same period.

That kind of "substantial" decoupling "would sharply reduce the country's productivity and GDP growth," Kuijs said.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 154411

Reported Deaths: 3836
CountyCasesDeaths
DeSoto10332104
Hinds10190199
Harrison7244111
Jackson6521124
Rankin5805103
Lee523695
Madison4964107
Forrest388286
Jones367788
Lauderdale3575147
Lafayette334952
Washington3241108
Lamar296650
Oktibbeha251362
Lowndes243864
Bolivar242984
Panola229653
Neshoba2241118
Marshall221250
Leflore207791
Monroe203978
Pontotoc202929
Lincoln194865
Sunflower192555
Warren178757
Tate177051
Union171026
Copiah167040
Pike164758
Yazoo158840
Scott157930
Itawamba156135
Alcorn154828
Pearl River154168
Coahoma151943
Simpson151953
Prentiss149531
Adams144451
Grenada142845
Leake139444
Holmes132361
Tippah128030
Covington127939
George126425
Winston124526
Hancock123640
Wayne120623
Marion118646
Attala117534
Tishomingo110842
Chickasaw109032
Newton108029
Tallahatchie97727
Clay93427
Clarke93053
Jasper84822
Stone80015
Calhoun78113
Walthall77229
Montgomery75825
Carroll74015
Lawrence73414
Smith72816
Noxubee72517
Yalobusha72328
Perry68126
Tunica62319
Greene61222
Claiborne58916
Jefferson Davis58817
Amite55814
Humphreys54719
Benton49918
Quitman4977
Webster46414
Kemper44718
Wilkinson40422
Jefferson36411
Franklin3535
Choctaw3507
Sharkey32317
Issaquena1204
Unassigned00

Alabama Coronavirus Cases

Cases: 249524

Reported Deaths: 3578
CountyCasesDeaths
Jefferson33064500
Mobile19951362
Madison13596148
Tuscaloosa13246154
Montgomery12435236
Shelby1061677
Baldwin889098
Lee781466
Morgan686150
Etowah643966
Calhoun6430121
Marshall635355
Houston537738
DeKalb492236
Cullman451542
Limestone433345
St. Clair432555
Lauderdale422354
Elmore412964
Walker3710111
Talladega359354
Jackson329823
Colbert329642
Blount299740
Autauga278042
Franklin256434
Coffee248315
Dale236254
Chilton227438
Dallas226832
Russell22383
Covington220434
Escambia198931
Tallapoosa184391
Chambers177950
Pike159914
Clarke159819
Marion143636
Winston135123
Lawrence131636
Pickens125718
Geneva12438
Marengo123124
Bibb119617
Barbour117811
Butler117842
Randolph104921
Cherokee103424
Hale97831
Fayette92516
Washington92219
Clay92024
Henry8756
Lowndes80229
Monroe79011
Cleburne77814
Macon74522
Crenshaw72030
Bullock70219
Perry6906
Lamar6898
Conecuh68814
Wilcox64218
Sumter58622
Greene42818
Choctaw42713
Coosa3544
Out of AL00
Unassigned00
Tupelo
Clear
46° wxIcon
Hi: 50° Lo: 24°
Feels Like: 42°
Columbus
Clear
46° wxIcon
Hi: 49° Lo: 22°
Feels Like: 42°
Oxford
Clear
43° wxIcon
Hi: 48° Lo: 23°
Feels Like: 39°
Starkville
Clear
45° wxIcon
Hi: 49° Lo: 20°
Feels Like: 41°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather