More evidence that China’s recovery from the COVID-19 pandemic lockdowns earlier in the year remains fitful and not convincing.
China’s economy grew at an annual rate of 3.2% in the second quarter, recovering from the record 6.8% slump in the first quarter as lockdown measures ended and the government expanded stimulus measures to counteract the shock from the coronavirus crisis.
On a quarter-on-quarter basis, GDP rose 11.5% in April-June, the National Statistics Bureau said, compared with expectations for a 9.6% rise and a 9.8% decline in the previous quarter.
So no ‘technical recession’ of two consecutive quarters of negative growth, but because of the huge fall in the March quarter, the economy still contracted by 1.6% in the first six months from a year earlier.
A worried central government has revealed out a raft of measures, including more fiscal spending, tax relief, and cuts in lending rates and banks’ reserve requirements to revive the coronavirus-ravaged economy and support employment.
And no wonder the Xi regime is worried about the fitful nature of the economy.
For the fifth month in a row in retail sales fell, which tells us that Chinese consumers are not very confident.
And that is important because like western economies, retailing is the major areas of domestic household consumption and when households are not spending (even though food prices remaining high and will rise again with the bad floods in southern China at the moment) it is not good news for overall growth.
Retail sales fell 1.8% on-year, much worse than the market’s predicted 0.3% growth, after May’s 2.8% drop.
It’s a warning of problems ahead for the rest of the world as more countries relax lockdowns and allow businesses to reopen.
China is more advanced with re-opening and it is not seeing the same degree of new infections as currently the US Indonesia, Australia, Japan, Hong Kong, Singapore and Brazil are seeing. Therefore consumption should really be stronger.
Fixed asset investment also fell – down 3.1% in the first half of the year from the same period last year, compared with a forecast fall of 3% but better than the 6.3% slide in the five months to May.
And yes, China’s industrial output rose 4.8% in June from a year earlier, data showed Thursday, expanding for the third straight month. Its up 4.from the 4% gain in May and 3.9% in April.
But output was down 1.3% for the first six months of the year, compared to the same period in 2019.
National Bureau of Statistics data shows output rose in manufacturing (5.1% vs 5.2% in May), mining (1.7% vs 1.1%), and utilities (5.5% vs 3.6%).
Among major industries, production rose in electrical machinery (8.7%), metal products (2.6%), general equipment manufacturing (7.4%), automotive (13.4%), pharmaceuticals (3.9%), ferrous metal smelting (6.3%), non-metallic mineral products (4.8%), chemical raw materials (4%) and power equipment (6.3%. Agriculture output contracted 2.4%.
