Entering recovery with -6.8% in Q1
Industrial production up 4.8% YoY
COVID resurgence and US-China tensions remain variables
[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Chinese economy, which had plummeted due to the novel coronavirus infection (COVID-19), succeeded in a V-shaped rebound in the second quarter. It greatly exceeded market expectations.
China's National Bureau of Statistics announced on the 16th that the gross domestic product (GDP) in the second quarter increased by 3.2% compared to the second quarter of last year. China recorded the worst growth rate of -6.8% in the first quarter due to the impact of COVID-19.
The second quarter economic growth rebound exceeded market expectations. The market had expected a 2.4% increase.
The rebound was anticipated through major economic indicators such as export-import statistics announced last month. Therefore, the focus was whether it would be a positive turnaround or just a reduction in the negative margin.
The industrial production, an indicator measuring production in manufacturing and mining sectors for June announced on the same day, increased by 4.8% compared to the same month last year. However, China's retail sales decreased by 1.8% compared to the same period last year. Since retail sales are an indicator of consumption power, this suggests that the warmth has not yet spread throughout the economy.
Fixed asset investment also decreased by 3.1% in the first half of the year. The decline was less than the expected 3.3%. It is evaluated that the Chinese economy, which had stopped due to the epidemic, has started moving again. Earlier, the People's Bank of China projected a 2.8% growth rate for the second quarter in its own report. The Bank of China predicted that the growth rate would reach 5.2% in the third quarter and that the annual growth rate for China this year would be 2.5%.
The spread of COVID-19 in China is calming down. As of the 14th, the number of new confirmed COVID-19 cases in China was 6, all of which were imported cases. The cumulative confirmed cases in China are 83,611, and deaths are 4,634. As COVID-19 came under the control of Chinese health authorities, several economic indicators such as industrial production, fixed asset investment, manufacturing and service PMI are showing a recovery trend. Premier Li Keqiang also evaluated at an economic experts and businesspersons forum held on the 13th that "the epidemic has had an unprecedented impact on the economy," and that the economy has entered a recovery growth trend.
However, it is uncertain whether the second quarter economic results can continue into the second half of the year. The possibility of a second wave of COVID-19 cannot be ruled out, and the US-China conflict is also an obstacle to economic growth. The second round of trade negotiations with the US is unlikely to be held for the time being.
The rebound of the Chinese economy is expected to have a positive effect on the Korean economy as well. Korea's export dependence on China reaches 25%.
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