China’s economy returned to modest growth in the second quarter of 2020 and reverted from the first contraction on record in the first quarter this year, as COVID-19 eases and policymakers announced economic packages, official data showed Thursday.
The world’s second-largest economy grew by 3.2 percent in April-June from a year earlier, reversing a 6.8-percent decline in the first quarter – the first contraction since at least 1992 when official quarterly gross domestic product (GDP) records started, according to China’s National Bureau of Statistics. In the first half of 2020, China’s economy declined by 1.6 percent year on year.
The reading beats the median 1.1 percent forecast by economists surveyed by Nikkei and coincides with an AFP poll which projected the economy would claw its way back into growth territory in the second quarter of this year, after the coronavirus pandemic handed the world’s second largest economy its first contraction in decades. The poll also forecast that China will be the only major economy to experience positive growth this year.
In the first half, the country’s added value of major industrial enterprises declined by 1.3 percent year on year, 7.1 percentage points lower than the decline in the first quarter. But the figure soon grew by 4.4 percent in the second quarter.
The decline of the service sector narrowed in the April-June period and modern service industries showed robust growth, with added value of the tertiary industry going up 1.9 percent in the second quarter and overcoming a 5.2-percent tumble from January through to March.
Aside from these, market sales of consumer goods gradually improved in the interim and fell 1.8 percent to reach 17.2 trillion yuan, down by 11.4 percent year over year, or 7.6 percentage points slower than the decline in the first quarter. Online sales moved upward by 7.3 percent, compared with a 0.8 percent fall in the January-March period.
Fixed asset investment fell 3.1 percent in the first half of the year, narrowing remarkably from a 6.3 percent decline in the first five months of the year. Investment in high-tech industries went up by 6.3 percent, while that in the first three months went down by 12.1 percent.
The surveyed unemployment rate of the population aged from 25 to 59 in June stood at 5.2 percent, which was 0.2 percentage points lower than that in May. In the first half, 5.64 million jobs were created in urban areas, accounting for 62.7 percent of the full-year target.
In the first half of 2020, China’s goods trade, in U.S. dollar terms, contracted by 6.6 percent year on year to settle at 2.02 trillion U.S. dollars. During the same period, exports edged down by 6.2 percent year over year to reach 1.10 trillion U.S. dollars, while imports tumbled by 7.1 percent to meet 930.9 billion dollars.
In a business confidence survey conducted by IHS Markit last month, the number of Chinese companies that expect business activity to grow over the next year rose by 22 percent, up from 1 percent in February and above the global average of 15 percent.
Thursday’s economic batch also revealed China-U.S. trade reaching the tune of 1.64 trillion yuan, falling off 6.6 percent from the same period a year earlier. Among them, exports to the U.S. stood at 1.25 trillion yuan after going down 8.1 percent; imports from the U.S. settled at 395.62 billion yuan, down 1.5 percent, with trade surplus sinking by 10.8 percent.
The U.S. economy contracted in the first quarter at its sharpest pace since the 2008 financial crises as stringent measures to slow the spread of the novel coronavirus almost shut down the country, ending the longest expansion in the nation’s history.
U.S. gross domestic product is tipped to shrink an unprecedented 35.0 percent this quarter after contracting by 4.8 percent in the first quarter, on a seasonally-adjusted annualized basis, according to a Reuters poll in April.
China’s inflation sailed further into growth territory in June, with its main gauge of the consumer price index moving upward by 2.5 percent from a year earlier. The indicator expanded 0.1 percentage points as compared to May due to prices rise in pork and vegetables.
Meanwhile, China’s producer price index (PPI), which measures costs for goods at the factory gate, fell by 3.0 percent from a year earlier, lower than the 3.2-percent contraction tipped by analysts in a survey by Bloomberg.
The PPI figure ended four consecutive months of falls, increasing by 0.1 percent in June on a monthly basis, as prices of international bulk commodities rebounded and the domestic manufacturing sector regained some ground. In the first half of the year, PPI fell by 1.9 percent, weighed on by the COVID-19 pandemic.
