Driven by increased retail spending, China has seen more significant growth than other major economies, thanks to the effective measures to put COVID-19 under control, according to experts.
China reported economic growth of 4.9 percent year-on-year in the third quarter, up from 3.2 percent in the second quarter. GDP growth reached 0.7 percent over the first three quarters, turning positive from negative 1.6 percent in the first half, according to the National Bureau of Statistics.
The strong economic data indicate that China is the first major economy in the world to resume growth at prepandemic levels, while economic activity in the United States, Europe and Japan has faltered.
“China has managed to get the pandemic much better under control than Europe and the US. As a result, the retail sector has been recovering much faster in China as consumers feel more secure to be in public spaces and in stores, compared to the countries which are still strongly impacted by the pandemic,” said Daniel Langer, CEO of brand strategy firm Equite and a professor of luxury strategy at Pepperdine University.
The luxury sector has been the driving force behind the retail recovery, he added.
In China, consumer spending rebounded to pre-pandemic levels for the first time. Retail sales increased 3.3 percent year-on-year in September, sharply up from 0.5 percent in August, according to the NBS.
“The new pandemic wave in Europe and the US is a signal that the Western economies will be still hampered for months to come. To make matters worse, historically, the unemployment rate has been one of the economic indicators that recovers slowest,” said Langer. “The high unemployment rate in the US has the potential to hamper economic recovery far beyond 2021.”
The US Bureau of Labor Statistics reported the country’s unemployment rate at 7.9 percent in September, with 12.6 million people unemployed. The International Monetary Fund has forecast the US economy will shrink by 4.3 percent and China’s economy will grow at 1.8 percent this year.
Since the COVID-19 pandemic “has compounded challenges for brands”, companies need to focus on opportunities in China, “and go from defensive to offensive,” said Langer.
John Walsh, a retired professor of the University of Massachusetts Medical School, said: “China’s outstanding economic recovery is due indeed to the way it handled COVID-19. China’s effort stands out head and shoulders above every nation in North America and the EU.”
In contrast, the response of the US has been “a disgrace” and overall, there has been “a systemic failure “in the West, he said.