Economy continues to recover in November

China’s economy showed further recovery in November, with faster growth in industrial production and the services sector gaining stronger momentum.

The industrial output of major enterprises grew by 7 percent year on year last month, 0.1 percentage points faster than October, according to data from the National Bureau of Statistics on Tuesday. It rose 1.03 percent on a month-on-month basis.

For the January-November period, industrial production of enterprises above a designated size rose 2.3 percent year on year, 0.5 percentage points faster than the first 10 months.

"The November figure extended the stable recovery, with stronger growth in production and demand and stable employment." said bureau spokesman Fu Linghui.

Major indicators continued to pick up, with industrial output and the services sector posting rapid growth, consumption and investment also rebounding, and production factors tending to be active, Fu said. 

"Based on key data for October and November, we expect economic growth to continue to pick up in the fourth quarter and at a faster pace than the third quarter, as both production and demand have been rallying steadily,” Fu said. "Looking ahead, among the world’s major economies China could be the only one to achieve positive growth throughout the year."

Value-added industrial output maintained steady growth in November, with more than 80 percent of the 41 major industrial sectors posting rises.

The mining industry rose 2 percent year on year in output last month, while manufacturing jumped 7.7 percent, 0.2 percentage points faster than October. The electricity, heat, gas, water production and supply sectors advanced by 5.4 percent year on year, up from 4 percent in the previous month. 

Output of the equipment manufacturing sector and the high-tech manufacturing sector, meanwhile, grew by 11.4 percent and 10.8 percent, respectively, 4.4 percentage points and 3.8 percentage points faster than the overall IP growth of major enterprises.

Fu also noted further recovery in the services sector. In November, it expanded 8 percent from a year earlier, 0.6 percentage points faster than the rise in the previous month, while for the January-November period it fell 0.7 percent year on year, narrowing from the decline of 1.6 percent in the first 10 months.

Of the eight major service industries, seven posted growth. Service production in the wholesale and retail sector and the leasing and commercial services, for instance, rose 6.5 percent and 3.6 percent, respectively, from a year earlier, both up 1.8 percentage points from October.

Growth of delivered value for exports in yuan terms rose to 9.1 percent year on year in November from 4.3 percent in October, consistent with the 14.9 percent jump in headline export growth compared with the 7.6 percent rise in October.

Headline retail sales growth in nominal terms rose to 5.0 percent year on year in November from 4.3 percent in October, in line with market expectations. 

Sales of goods related to consumption upgrading increased rapidly last month, with communications equipment, cosmetics and gold or silver jewelry all up sharply by 43.6 percent, 32.3 percent and 24.8 percent, respectively, from a year earlier. 

Auto sales growth, however, inched down to 11.8 percent year on year in November from 12.0 percent in October, broadly in line with data reported by the China Passenger Car Association which indicated retail sales growth of passenger cars (by volume) solid in November, unchanged from 8.0 percent year on year in October.

From January to November, China’s online retail sales totaled 10.54 trillion yuan, up 11.5 percent year on year, 0.6 percentage points faster than in the first 10 months. Online sales of physical goods increased 15.7 percent, accounting for 15.7 percent of the overall retail sales of consumer goods.

Fixed-assets investment growth continued to improve in November, albeit only moderately, to 9.7 percent year on year from 9.5 percent in October, taking its year-to-date growth to 2.6 percent year on year from 1.8 percent over the same period, in line with market expectations.

November’s rise in FAI growth was led mainly by manufacturing investment, the growth of which surged to 12.5 percent year on year in November from 3.7 percent in October, more than offsetting the fall in infrastructure investment growth (to 5.9 percent year on year in November from 7.3 percent in October), according to financial services company Nomura.

"We believe the impressive export growth in 2020, by helping to boost the V-shaped recovery in the domestic economy since Q2 2020, has for the past couple of months reduced the government’s need to ramp up infrastructure spending despite large bond issuance," said Lu Ting, Nomura’s chief China economist.

"That said, we expect manufacturing investment growth to remain elevated in coming quarters following its surge in November, as Beijing’s policy support, especially under the 'dual circulation strategy,’ may more than offset the drag from recent rise in credit defaults," Lu said.

By type of ownership, the growth of FAI by privately owned enterprises rose to 8.4 percent year on year in November from 5.6 percent in October, more significantly than the uptick in growth of FAI by state-owned enterprises (to 11.8 percent year on year in November from 11.5 percent in October).