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Chief economist update: China's post-pandemic economy

"I guess it also rings a bell for some countries, which are still struggling to fight COVID-19, that without strict measures, the virus won't be fended off. We fought hard, this is our payback."

Zhang Yong, a small taxi company owner in Wuhan, is proud for China has proved that the coronavirus could be conquered. So much so that its death sparked a post-pandemic pool party Wuhan Maya Beach Water Park that went viral on August 17.

Yes, Virginia, "payback" might not be the right word (or just lost in translation) but we all know what it meant, Mr & Mrs Yong and their children  -- China ditched its one-child diktat back in 2013 - are now reaping the sacrifices they made under the politburo's cruel to be kind policy under the pandemic.

China's draconian quarantine and isolation measures were criticised and condemned by the outside world as a violation of human rights and/or an infringement of civil liberties. But there was none of that inside the country - there were no protests or indignation by its citizens - given the threat of being incarcerated at home or in state prison, death by coronavirus or death by the state.

Draconian and an abuse to human rights it may be but it worked ... in Wuhan (as the pool party shows) and in nipping the second wave budding in Beijing in just around two weeks.

The "payback" is there for all to envy. Latest data from worldometer.com puts China in the 40th position among 215 countries in terms of total cases of infection (85,202) to date; number 131 in new cases (8); number 97 in new deaths (0). Adjust these numbers for the population of around 1.4 billion and the percentages would be as miniscule as the coronavirus itself.

More bang for lesser bucks. China's draconian response also limited the government's spending measures. Statista.com figures show the Chinese government's fiscal stimulus packages amounted to 7% of GDP as at July 2020 - less than Japan's 21.1%, America's 13.2%, Australia's 10.6% or Germany's 8.9%.

The PBOC lowered its benchmark lending rate just twice so far this year - in February by 10 bps and in April by 20 bps - to 3.85% and cut its reserve requirement ratio for big banks by a total of 200 bps from 13% at the end of 2019 to 11% by May this year.

While the PBOC remains on alert, recent activity stats are easing pressure on both China's fiscal and monetary authorities.

The annual growth in Chinese retail spending is back in the black, up by 0.5% in the year to August after spending five months in the red.

Industrial production continued to strengthen - up by 5.6% in the year to August, accelerating from 4.8% in the previous month and reversing March's 1.1% contraction.

While the annual growth in fixed asset investment remains negative (-0.3%) in August, it has sequentially improved from the 24.5% drop recorded in February this year.

And oh, China has also escaped a technical recession.

Read our full COVID-19 news coverage and analysis here.

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