China, Widespread Expectations for Positive GDP Growth Rate Ahead of Q2 Announcement

[Asia Economy Reporter Park Sun-mi] Ahead of the announcement of China's Q2 economic growth rate on the 16th, expectations for positive growth are widespread.

On the 15th, Global Times expressed optimism that China's economy could return to a positive growth trajectory in Q2 after recording a -6.8% growth rate in Q1, and that it would achieve differentiated results compared to other countries experiencing recessions due to COVID-19.

Chinese economic experts are predicting a 'V-shaped' recovery.

Nomura Securities' Lu Ting, China economist, revised the Q2 growth forecast upward from 1.2% to 2.6%, explaining, "Since mid-March, the economy has shown a gradual recovery. There has been a surge in pent-up demand, increased production, and a rise in medical supplies exports." Zhao Jinping, Director of the Foreign Economic Research Department at the Development Research Center of the State Council of China, also stated, "Since April, domestic production in China has accelerated its recovery, with manufacturing activity in Q2 returning to last year's levels," adding, "Manufacturing investment has recently seen a reduction in its decline." He expressed optimism, saying, "We can confirm strong recovery momentum in domestic consumption in China during Q2."

Recent economic indicators for June support experts' optimistic outlook. According to the China Customs Administration the previous day, China's dollar-denominated exports in June increased by 0.5% year-on-year. Experts had expected a 1.5% decline in June exports, but exports unexpectedly turned positive. In May, exports had decreased by 3.3% year-on-year. Imports also successfully turned positive. June imports rose by 2.7% year-on-year, a significant improvement from May's -16.7%. Experts had predicted that June imports would record a decline of around -10%, less severe than May's.

Even if the economy returns to positive growth in Q2, the large contraction in Q1 means that the overall growth rate for the first half of the year is still likely to remain in negative territory. Professor Keng Yi of the Economics Department at Tianjin University of Finance and Economics forecasted, "Although China's Q2 economic growth rate will rebound, it is unlikely that the economy grew over the entire first half. The overall result for the first half is expected to show a contraction of about 1%."

However, the positive turnaround in Q2 lays the foundation for expectations of strong growth in Q3. Tian Yun, Deputy Director of the Beijing Economic Operation Association, predicted, "China's economic growth rate in the second half of the year could reach 3-4%."

Meanwhile, on the 13th, Premier Li Keqiang officially assessed that China's economy has entered a recovery phase following the COVID-19 shock during a roundtable discussion with economic experts and business leaders, stating, "Through nationwide efforts, the economy has recently entered a recovery growth trend and is gradually stabilizing."

Global Times evaluated that the possibility of a V-shaped rebound in China's economy is due to systemic advantages that enabled a swift and effective response to COVID-19.