China’s Recovery Continues But Wary Consumers Show Vulnerability
  • Vote Up0Vote Down venynxvenynx
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    China’s economy continued to inch out of the coronavirus slump in May,
    though a reliance on industry amid sluggish consumer demand underlines
    the fragility of the recovery as further infections appear.To get more
    news about chinese industry and management practice, you can visit official website.

    Industrial output rose 4.4% from a year earlier, versus a median
    estimate of a 5.0% expansion. Retail sales fell 2.8%, compared to a
    projected 2.3% drop. Fixed-asset investment declined 6.3% in the first
    five months, versus a forecast 6% drop. The surveyed urban jobless rate
    fell to 5.9% from 6% the previous month.

    A jump in cases in Beijing over the weekend has raised fears of a
    resurgence of the pandemic in China, threatening to blunt recent
    government efforts to revive the economy. Beijing has shuttered the
    city’s largest fruit and vegetable supply center and locked down nearby
    housing districts after nearly 100 people associated with the wholesale
    market tested positive for the coronavirus.

    The Monday data showed the gradual recovery in China’s economy was still
    mainly driven by the supply side thanks to continued policy stimulus,
    while demand remains weak. Industrial production has rebounded from a
    contraction in February, while private consumption is still shrinking
    and investment hasn’t recovered.

    “The recovery is on the track while mixed performance can be observed
    everywhere -- manufacturing still better than services, cars better than
    catering,” said Zhou Hao, an economist at Commerzbank AG in Singapore.
    “However, the virus concerns will cloud the economic outlook.”

    While highlighting the moderate improvements in May and reiterating the
    pledge to strive to achieve the full-year economic and social
    development goals, the statistics bureau also acknowledged downside

    “The overseas epidemic situation and the world economic situation have
    become more severe and complicated, and the stable operation of the
    domestic economy still faces many risks and challenges,” the bureau said
    in a separate statement.

    With the rest of the world in recession, exports dropping and China’s
    relations with the U.S. continuing to worsen, a rebound relies to a
    large extent on domestic consumption.

    “It’s quite clear that production has recovered pretty nicely, but the
    consumption, as well as investment actually are lagging behind,” Shen
    Jianguang, chief economist at leading online retailer Inc., said
    on Bloomberg television after the data. “So it’s the lack of demand
    that’s the main problem of the Chinese economy right now.”

    Output in the consumer goods sector shrank 0.6%, compared with the 0.7%
    increase last month, the statistics bureau said, while export orders
    were “insufficient.” The value of delivered exports shrank 1.4%, and
    dropped more than 10% in some important sectors.The People’s Bank of
    China supplied banks with 200 billion yuan ($28 billion) in fresh
    liquidity Monday while letting some previous loans expire, leaving the
    financial system needing further injections if a looming cash crunch is
    to be avoided. Economists say the chance for a reserve ratio cut in the
    near-term is increasing after the move.

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