After April low, China’s economy is expected to rebound

Although China is facing downward pressure due to the complex international environment and sporadic domestic virus outbreaks, the fundamentals that support the country’s steady and long-term economic growth remain unchanged, with leading indicators macroeconomic data set to see a significant rebound in the coming months, experts said.

Value-added industrial production in April fell 2.9% year-on-year. With production suspended by the pandemic, the manufacturing sector, especially in the Yangtze River Delta and northeast China, has seen obvious declines.

April turned out to be the tough time of the year, but the overall economy will start to recover from May, according to research from Citic Securities, Yicai.com reports. Currently, new confirmed cases of COVID-19 are on the decline in key cities, and transportation difficulties that hampered business operations have been effectively mitigated.

Fu Linghui, spokesman for the National Bureau of Statistics, said China still has a complete industrial system with strong support. The added value of industrial enterprises above the designated size rose 4% year-on-year, in the first four months.

Retail sales of consumer goods totaled about 2.95 trillion yuan ($434.28 billion) in April, down 11.1 percent from a year earlier.

The drop in consumption was mainly caused by the short-term impact of the virus outbreak, Fu said. As production and life return to normal, the pent-up consumption power will be gradually released.

Wang Jun, a member of the China Chief Economist Forum, told Yicai.com that China has huge consumption potential and space to exploit. He suggested that the government take action through fiscal policy, such as issuing vouchers to stimulate short-term consumption.

From January to April, investment in fixed assets reached 15.35 trillion yuan, up 6.8 percent from the same period last year. Investments in the infrastructure and manufacturing sectors increased by 6.5% and 12.2% respectively. Investment in real estate fell 2.7%.

Zhu Haibin, JP Morgan’s chief China economist, said China’s real estate market is expected to recover in the second half as central and local governments have issued various policies to boost the real estate sector and ease the financing dilemma. property developers, according to Yicai.com.

Major real estate-related indicators are also expected to turn positive in the fourth quarter of this year, Zhu said.

Despite the slight drop in the figures for the industrial and service sectors in April, the second quarter will maintain a good growth trend, Fu said.

Starting this month, relevant ministries have issued a series of policies aimed at helping SMEs and securing employment for new graduates.

Economic recovery will accelerate as supportive policies take effect, Zhu said, and he expects economic performance in the second half of the year to be significantly better than in the first half.
Source: China Daily

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