China's GDP Returns to Growth With 3.2% Gain in Second Quarter

Cornelia Mascio
Luglio 18, 2020

Economists warn, however, that official Chinese economic figures should be taken with a grain of salt, with longstanding suspicions that data is massaged for political reasons by a ruling Communist Party that has based its legitimacy on delivering continued prosperity.

Business activity recovered in the quarter as China emerged from the pandemic, even as many parts of the world remained in lockdowns.

NBS spokeswoman Liu Aihua said China's economy was staging a "gradual recovery".

China's economy already showed signs it was headed toward a downturn past year, as a tit-for-tat tariff dispute with the United States dragged down exports, a major driver of growth, in turn dealing a crushing blow to investment and consumer spending at home.

"The pandemic is spreading, and its tremendous impact on the global economy will continue to develop and evolve", said the National Bureau of Statistics.

A research note from Deutsche Bank said the "V-shaped recovery" was "largely completed". As it came out from the coronavirus crisis in March-April, China cashed on growing COVID-19 demand for medical equipment from all around the world by exporting billions of dollars' worth of materials.

With Sino-US tensions escalating in the wake of Beijing's recent enforcement of a national security law for its territory Hong Kong, lackluster demand for Chinese products from USA allies is likely to stifle the world's second-biggest economy. China's GDP took the worst hit since the disastrous Cultural Revolution in 1976, plummeting by 6.8 per cent in the first quarter of 2020 as the country took unprecedented measures to fight the coronavirus pandemic that brought the economy to a standstill.

China usually sets a gross domestic product growth target at an annual parliamentary session, but it abandoned doing so this year with the epidemic of the virus, first detected in the central city of Wuhan, considerably darkening the economic outlook.

In 2019, the nation's economy grew at its slowest pace in 29 years, expanding 6.1 percent from a year earlier.

Some observers expect China to be the only major economy to see its economy grow this year. "The second-quarter performance was better than expected, as production on the supply-side picked up and investment caught up", Tian Yun, vice director of the Beijing Economic Operation Association, told the state-run Global Times. "The economy in the latter half of the second quarter moved from post-virus recovery to periodic climbing up to a certain extent", Tian said.

The new data signals that the country has become the first to start recovering economically from Covid-19. It also means China avoids going into a technical recession - signified as two consecutive periods of negative growth.

Retail sales, a gauge of consumption, declined by 3.9 percent year on year in Q2, shrinking by 15.1 percentage points from the first quarter's decrease.

The urban unemployment rate fell to 5.7 percent in June, compared with 5.9 percent a month earlier.

Fixed asset investment - the amount of money organisations spend on machinery, buildings, land or new technology, and which includes government infrastructure spending - fell by 3.1 percent year-on-year in the first half of 2020.

China's value-added industrial output went up by 4.4 percent year on year in Q2 as factories stepped up production amid COVID-19 control.

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