China’s economy is expected to grow 1.9 percent this year, almost twice as much as previously forecast, the International Monetary Fund said Tuesday, tagging the superpower as the only major nation likely to expand in the face of the coronavirus.
However, it warned that with other countries and crucial markets still struggling to overcome the pandemic, the road ahead remained bumpy, while a standoff with the US on various issues posed a threat to the global recovery.
After a record contraction in the first three months because of unprecedented lockdowns and factory closures, the world’s number-two economy surged back to life in the second quarter.
Officials essentially shut down the economy soon after the disease began spreading at the start of the year — forcing millions to stay at home and closing businesses.
But the moves, and strict containment measures to clamp down on later outbreaks, have helped spark a bounce back in the second half of the year.
The economy expanded 3.2 percent in April-June, having shrunk 6.8 percent in the previous quarter.
And in an update to its World Economic Outlook on Tuesday, the IMF said it now sees annual growth of 1.9 percent, compared with its earlier prediction of one percent in June.
China’s exports have “recovered from deep declines earlier in the year, supported by an earlier restart of activity”, the IMF report said.
A “strong pickup in external demand for medical equipment and for equipment to support the shift to remote working”, also boosted exports.
Chinese customs authorities on Tuesday said exports jumped 9.9 percent on-year in September, initially spurred by worldwide demand for Made-In-China personal protective equipment but now widening to household appliances and plastics.
China is the only major economy with a positive growth forecast for this year, according to the Fund.
“While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks,” the IMF said.
The body warned that the world faced a “long, hard, dire” path to post-pandemic recovery and slashed its annual forecasts further, predicting the global economy would shrink 5.2 percent, compared with a 4.9 percent contraction predicted in June.
The prolonged US-China trade war that has tipped into a bitter battle for global tech supremacy also threatened to undermine global recovery, IMF said.
As part of a partial trade truce signed in January, Beijing promised to import an additional $200 billion in American products over two years, ranging from cars to machinery and oil to farm products.
But the pandemic has put pressure on the agreement and China’s purchases of those goods has been lagging.
The IMF warned that “tensions between the world’s two largest economies remain elevated on numerous fronts” as Beijing and Washington also lock horns over China’s treatment of ethnic minorities in Xinjiang and Beijing’s security clampdown in Hong Kong.
China is still battling localised coronavirus outbreaks, but has largely curbed its spread, allowing most businesses including cinemas and hotels to reopen and domestic tourists to travel.
The IMF expects the Chinese government to continue with its infrastructure spending to bolster growth through 2021.
But it warned against investments in “dirty sectors” including coal, cement and steel that have led to an increase in China’s carbon emissions that previously peaked in 2013.