The Chinese economy resumed growth in the second quarter after hitting a historic low in the January-March period due to the health crisis, official statistics released on Thursday showed thanks to the lifting of containment and support measures initiated by the government.
However, the world’s second economic power is not completely out of the woods, while consumption and investment have remained sluggish, highlighting the need for policymakers in Beijing to provide additional stimulus to promote economic recovery.
China’s gross domestic product (GDP) rose 3.2% year on year in the second quarter, according to data from the National Bureau of Statistics (SNB).
This is a rebound higher than the consensus, which stood at + 2.5%, after a historic fall of 6.8% in the first quarter – the first contraction of the Chinese economy since at least 1992, year of l introduction of official growth statistics.
These data are being watched closely around the world, especially while many countries are still struggling with the coronavirus pandemic, even though China has largely managed to control the health crisis and has been able to restart its activities.
“While it is fair to say that the data generally beats the consensus, it also reveals that the Chinese consumer remains behind in terms of the recovery plan,” noted Rodrigo Catril, strategist at NAB in Sydney. .
“It is above all a revival guided by the stimulus of the government, which is essentially centered on the industrial aspect. The consumer remains very cautious. This cautiousness is something that the market examines in countries where the consumer plays a more important role. , so this also applies to the United States, “he added.
The decline in consumption is, in fact, apparent. Wanda Film, the country’s largest cinema chain with more than 600 theaters, said it expected a net deficit between $ 214 and $ 228 million in the first half, against a net profit of about $ 75 million on the same period in 2019.
MORE NECESSARY SUPPORT
In the first six months of the year, the Chinese economy shows a contraction of 1.6% compared to the same period last year, indicate the official data.
From one quarter to the next, GDP grew by 11.5% over the April-June period, while economists polled by Reuters expected an increase of 9.6% after a contraction of 10% in the first quarter.
The world’s second largest economic power, which was the first affected by the coronavirus pandemic – which appeared at the end of last year in central mainland China – has slowly recovered in the past two months, even if the rebound post -health crisis was uneven.
Prime Minister Li Keqiang, quoted on public radio on Monday, warned that the battle would continue to be fierce while the situation remains worrying both in China and abroad.
Beijing is expected to maintain increased support for the economy in the second half, despite fears about the risks of an increase in debt.
The surge in coronavirus cases in some countries, including the United States, has cast a shadow over the rebound in demand for Chinese exports, while job cuts and the specter of a new wave of infections have kept Chinese consumers cautious.
According to data released separately on Thursday, Chinese industrial production rose 4.8% year-on-year in June, after increasing 4.4% the previous month. This is the third consecutive month of growth for the sector, offering some respite to the Chinese economy.
But consumption and investment have remained weak.
Retail sales fell 1.8% year-on-year in June, the fifth consecutive month of decline, while economists expected a rebound of 0.3% after falling 2.8% in May.
Investment in fixed assets fell 3.1% in the first half compared to the same period last year. The consensus was 3.3% down after a 6.3% decline in the first five months of the year.