China’s economy expected to recover from April slump
China’s economy is expected to improve this month despite weak trade data in April, and economic activities could rebound with a gradual recovery in household spending and strong support for fixed investment in the coming months. officials and experts said Monday.
They said China’s economy is expected to gradually stabilize and recover, with some key economic indicators improving, better containment of COVID-19 outbreaks and stronger policy support.
Fu Linghui, spokesperson for the National Bureau of Statistics, told a press conference Monday in Beijing that while China’s economic activity in April was badly affected by the pandemic, the impact would be temporary.
“COVID-19 outbreaks in areas such as Jilin Province and Shanghai have been effectively controlled, and work and production have resumed in an orderly manner,” Fu said.
“With the government’s effective measures to boost domestic demand, ease pressures on businesses, secure supply and price stability, and protect people’s livelihoods, the economy is expected to improve in May. “
Fu said the fundamentals that underpin China’s steady and long-term economic growth remain unchanged, and the country has many favorable conditions to stabilize the overall economy and achieve growth targets.
China’s economy cooled in April with a decline in industrial production and consumption as a resurgence in domestic COVID-19 cases severely disrupted industrial, supply and logistics chains. BNS data showed the country’s value-added industrial production and retail sales fell 2.9% and 11.1% year-on-year in April.
Tommy Wu, senior economist at think tank Oxford Economics, said COVID-19 cases in Shanghai and its ripple effect across China, as well as logistical delays resulting from traffic checks in some parts of the country, have seriously affected domestic supply chains. Household consumption has been hit even harder due to the pandemic and weak sentiment.
“The disruption in economic activity may well extend into June,” Wu said. “Although Shanghai will gradually resume store operations, starting today, as new COVID cases have dropped significantly the last few days, the return to normality will probably be very gradual at first.”
While the government has prioritized COVID containment, it is also committed to supporting the economy through stronger infrastructure spending and targeted monetary easing to support small and medium-sized businesses, manufacturing and real estate, and infrastructure funding, Wu added.
Looking ahead, he said China’s economy could experience a more significant recovery in the second half, with a quarterly contraction in the second quarter before a return to growth.
Citing official data, Wen Bin, chief researcher at China Minsheng Bank, said the latest economic indicators signaled the impact of the pandemic and increasing downward pressures on the economy.
SNB data showed that despite falling industrial production and consumption in April, investment in fixed assets rose 6.8% year-on-year in the January-April period.
Wen said the steady growth of investment in fixed assets shows that investment has gradually become a key driver to support economic stability.
The BES said investment in manufacturing and infrastructure construction jumped 12.2 percent and 6.5 percent, respectively, in the first four months. Investments in high-tech manufacturing, in particular, jumped 25.9% in the January-April period.
Wen attributed the relatively faster growth in infrastructure construction investment to the government’s fiscal and monetary policy support.
Zhou Maohua, analyst at China Everbright Bank, said the steady growth of manufacturing investment, especially high-tech manufacturing investment, shows the strong resilience of manufacturing investment and China’s accelerated economic and industrial transformation.
Zhou said once the pandemic is contained, he expects economic activity to pick up in May with improvement in major economic indicators such as industrial production, consumption and investment.
These views were echoed by Yue Xiangyu, an analyst at the Institute for the Development of Chinese Economic Thought at Shanghai University of Finance and Economics, who believed that the economy could recover in the third quarter with the strengthening of fiscal and monetary support from the government.
Given China’s strong steps to resume work and production in areas like Shanghai, Chen Jia, a researcher at the International Monetary Institute of Renmin University of China, said the Chinese economy was on the rebound and the country would likely meet its annual GDP growth target of around 5.5 percent.
To stabilize the overall economy, Wen of China Minsheng Bank said the government should step up efforts to better control the pandemic, intensify economic adjustments, ease pressures on hard-hit sectors and enterprises, and stimulate demand. interior.
Source: China Daily