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China: recovery continues, services accelerate, and foreign trade resumes

The national bureau of statistics confirms growth in August of the composite Purchase Managers Index (PMI), covering both manufacturing and service activities, and accelerates to 54.5 points from 54.1 points in the previous month, well above the 50-point threshold separating growth from contraction. In particular, the expansion of the services sector increases with non-manufacturing PMI rising to 55.2 from 54.2 in July, to consolidate the economic recovery in the post-pandemic phase.

China is the second-largest economy globally in terms of GDP, but it is the main player in international trade. Since it entered the World Trade Organization, Beijing had increased the volume of trade with other economies to the peak of trade volumes in 2018, with inflows and outflows over 4.620 billion dollars, including 2,490 billion exports and 2,130 billion imports. In 2019, despite the United States' tensions, the total trading volume decreased by only 1% compared to the previous year.

The outbreak of the pandemic in the first part of 2020 not only affected health systems, businesses, and financial markets but sharply reduced Chinese foreign trade in the first half of the year. However, the Chinese customs data for July showed clear signs of recovery, which was external trade increasing by 3.4% compared to the same month of the previous year with exports up by 7.2% and imports down 1.4%.

ASEAN bloc countries are China's major trading partners, and the volume of trade with Southeast Asian economies accounts for 15% of total foreign trade in 2020. On the other hand, trade with the United States decreased by 3.3% compared to the same period of the previous year: especially a decline in Chines exports to the United States (-4.1% on an annual basis), while imports from the United States fell slightly by 0.3%.

The International Monetary Fund’s latest estimates (World Economic June 2020) predict that Beijing will be among the few to maintain a positive GDP growth rate even in 2020 (+ 1%), followed by a rebound of 8.2% 2021.

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